Why Your Assumed Return Rate Can Wreck Your Coast FIRE Math
Your assumed return rate is the shakiest number in the whole Coast FIRE calculation, and it swings the answer more than almost anything else. At 35, aiming for $1,000,000 by 65, a 5% assumption demands $231,377 today while 9% demands just $75,371. The Coast FIRE calculator lets you watch that swing with your own figures.
The short answer
A 2-point difference in assumed return changes your required savings by nearly double over a 30-year coast. That's because the return sits in an exponent. It doesn't nudge the result. It multiplies through every one of the 30 years.
Small errors in the rate become large errors in the target, quietly, in whichever direction hurts you. Pick a rate that's too high and you undersave without noticing. Too low and you delay freedom for no reason. So treat any single Coast FIRE number as the middle of a range, not a fact.
How sensitive the number is
Here's the same 35-year-old, the same $1,000,000 target at 65, with only the return assumption changed:
| Assumed real return | Needed today at 35 |
|---|---|
| 5% | $231,377 |
| 7% | $131,367 |
| 9% | $75,371 |
The 9% plan asks for about a third of what the 5% plan asks for. Nobody's spending changed. Nobody saved harder. The only thing that moved was a guess about the next 30 years of markets. That tells you how much weight the guess is carrying.
Stress-test your own assumption
Project your savings at 5%, 7%, and 9% and look at the spread. That spread is your real planning range.
Open the investment growth calculator →Why 7% is the standard pick
7% real is the standard because it's what US stocks have actually delivered, on average, over very long periods. The rough history: equities returned about 10% a year before inflation, inflation averaged around 3%, leaving about 7% in real purchasing-power growth. Coast FIRE math borrows that average. It's a reasonable center of gravity for a stock-heavy portfolio held for decades.
But an average is a summary, not a schedule. Individual decades have come in far above and far below 7% real, and your 30 years get exactly one path through the market, not the average of all paths. Sequence matters too. Weak early returns do more damage than weak late ones, because the early money is what everything else compounds from. No single input hides that much uncertainty inside such a small number.
One more caveat before you lock it in: that 7% is before fees and taxes. A 1% annual fee quietly turns 7% into 6%, and over 30 years that shaves a meaningful chunk off the final pile. If your accounts carry meaningful fees, mentally knock the assumption down a point before you run the math.
When to use 5% instead
Use 5% when your situation gives returns less room to rescue you. A shorter coast is the big one: at 50 with only 15 years to grow, a weak decade can't be absorbed by a strong one later. A bond-heavy portfolio is another, since its expected return genuinely sits lower. And if this plan is your only plan, with no room to save more or work longer, the extra margin is cheap insurance.
The practical move is to run two scenarios. Plan around 7% as your base case, then check the 5% conservative case. If you can reach the 5% number, your plan survives a mediocre market. If you can only reach the 7% number, you know exactly which assumption your retirement is riding on. Our worked example for a 35-year-old shows both figures side by side: how much you need at 35 to Coast FIRE.
See your range, not just a number
Two minutes at three different return rates will tell you more about your plan than one precise-looking figure.
Run my Coast FIRE number →The bottom line
Your return assumption isn't a detail. It's the lever that can nearly double or halve your Coast FIRE number, and it's the one input nobody can know in advance. So plan in ranges: run your savings through the investment growth calculator at 5% and 7%, and make sure your life works at both. Two companion reads: how inflation interacts with the return assumption and our methodology page.