Where Are You On the Financial Independence + Retirement Matrix?

The FIRE Matrix is a way of mapping your progress to Financial Independence taking into account your savings rate and the amount of savings you had each year. Try creating your own to show your progress over time!

Written by Adam on 2020-02-17. Minafi, Blog, Financial Independence, Canonical. 11 comments. Find out how I make money.

The road to financial independence isn’t a straight line. It’s not a curved line hockey-sticking up either. In reality, the path to financial independence has up years and down years and won’t look anything like what CF Fire Sim or FIRECalc say.

A lot of that is because stock market returns are completely outside of your control. As are (in most cases) receiving a windfall or making a speculative investment that hits it big.

FIRE Matrix map

What is in your control are the basics:

  • How much you earn
  • How much of that you spend
  • How much of that you save

Mapping your savings rate over time is a great way to see if you’re experiencing lifestyle inflation, but it’s still only telling part of the story. One thing that matters just about as much is how much you’ve saved up!

I recommend/propose a new way of measuring your progress to FIRE – The FIRE Matrix. Using only two things – savings rate and savings multiple – it shows a unique path to FIRE that’s specific to you.

Savings Rate

You probably already know what “savings rate” means. It’s the percent of your take-home income that you put into savings in a given year. For example, if you earn $40,000 a year after taxes and save $10,000, then you’re saving $10,000/$40,000 = 25% of your income. You can’t save more than 100% of your income.

You can also have a negative savings rate – it’s typically called a withdrawal rate. For the purpose of this chart, I’m going to describe a “negative savings rate” slightly different:

Pick a withdrawal rate that works for you – maybe 3.5%. Assuming you have $1,000,000 saved up, that means you could spend $35,000 a year. If you withdrawal and spend $35,000 a year, that’s a -100% savings rate for this chart.

If you spent $70,000, and your 3.5% WR says you can only spend $35,000, that’d be a -200% savings rate.

In a “traditional retirement” where you have enough to coast forever, your savings rate will likely be between -50% and -100% depending on how close you’re cutting it.

If you’re making income, but not enough to cover your expenses, you’ll have a negative savings rate too. It’ll still be a higher savings rate than if you didn’t make that income.

Savings Multiple

Describing savings multiple is a lot easier. For the given year, that’s the multiple of that years’ spending that you have currently in savings + investments.

If you spent $40,000 in a given year and have $0 saved up, that’s a savings multiple of 0.

If you spent $40,000 in a given year and have $80,000 saved up, that’s a savings multiple of 2x.

What’s key here is that it’s based on your spending AND how much you had saved up during that year.

If you reached the point where you had 25x saving multiple, that would mean you’ve reached traditional FI using the 4% rule! That assumes your spending for that year wasn’t an anomaly and won’t rise more than inflation going forward.

Bring Out The Graphs!

Ok, that was a lot. I think it’s easier to show this on a graph. The X-axis is your savings multiple, while the Y-axis is for your savings rate in that given year.

FIRE Matrix

In reality, your matrix may go much farther to the left if you have a bunch of student loans or other debt to pay off.

Going from left to right it looks like there’s a LOT of ground to cover. Going from that 0x savings multiple to a 1x is absolutely huge. It’s an amazing step that gives you as much in savings as you spend in a year.

The idea of “traditional retirement” usually looks something like this: you’ve saved up a bunch, say 33x your spending. You spend 1/33 of that each year without making a cent of income. In other words, in a “traditional retirement” model, you’ll be down here at that point.

From everyone I’ve talked to, this is pretty far off from what happens. Sometimes you’ll earn a little income and this will be only -50%. Some years you’ll move and have additional expenses resulting in a savings rate lower even lower than -100%.

Saving For Retirement

Ok, let’s look at this with some real data. In this case, we’re going to look at 3 different people. Each of them are starting out little project making $40,000 a year. They increase their spending by 2% each year – roughly keeping pace with inflation. They also get a 5% raise each year and save ALL of it. They save what they don’t spend.

The only thing that’s different is their starting spending.

Ok, so in other words here are the assumptions:

  • Starting salary of $40,000/yr.
  • 5% raise each year which is saved.
  • 2% rise in spending each year (inflation).
  • 7% market returns on their savings
  • Different savings rates to start – 0%, 25% and 50%.

If we map these out we can start to see the makings of a path to FI!

Starting with a 50% savings rate and savings raises gets you to FI in only 14 years! Add another 7 years if your savings rate is 25% and an additional 8 if you start with no savings.

What amazes me about this graph is that someone who graduates from college at age 22 with $0 in the bank could potentially be FI by 36 by doing nothing other than throwing money into index funds and letting it grow.

It’s not that easy of course. Most people don’t want to live like college students once they start making money. Once I had the ability to eat out when I wanted, buy a video game when it came out and go on vacations my spending ballooned! That’s to expected. It’s also why someone making $40,000 and saving half will have a much different lifestyle than someone making $100,000 and saving half – even if they both would reach FI at the same time.

In all cases, the shape of the path is the same – it climbs the most at the beginning then levels out you reach about 5x savings multiple. It takes a surprisingly small amount of time before your investments are making more money than you’re saving each year! In the 50% SR example, the growth of your investment surpasses your yearly contributions around year 15. It’s around year 25 if you start by saving 0%.

Again though, this assumes a steady market, known growth for your income and consistent inflation. In the real world, none of those things happen.

A Real FIRE Matrix

My route to FIRE wasn’t anything like the charts above – and I don’t expect your path will look anything like that either. There were years I saved much more than I expected and years when my savings multiple went down due to the stock market.

Some years I ended up spending way more than I thought! Buying a house, moving across the country, fixing up a house to sell or combining our total spending between my now wife and I. All of these raised my spending, and effectively lowered my “savings multiple”.

Another thing to point out here – I had the same amount of money saved up when I was 24 and 29. I was saving 20%-40% of my income, but it didn’t matter: that was during The Great Recession. I lost about half my portfolio and it took years for it to recover.

I didn’t get 5% raises each year. Some years I got much more, or job hopped, while other years I saw my salary go down (that’s another story). In my case, I made up for that with some very unexpected windfalls – 3 to be precise. One when my mom passed away, one when the startup I was working for was acquired, and another when the company that acquired us went public.

Without these 3 super-saving events, this chart would look a lot more like the ones farther above. If you only saw a savings rate of 95% it’d be hard to tell how huge that was. Seeing it in context with the distance between the points nearest to it puts the impact into perspective.

Looking To Retirement

Where will this chart go next? I have absolutely no idea. Last year we still had Mrs. Minafi’s income (and insurance) which helped soften the blow. This year and next – who knows. We may even end up with a savings rate BELOW -100% – which would be a huge red flag.

What this chart did make clear for me is that reaching a specific “savings multiple” by itself isn’t enough to say I’m comfortable sitting there long-term. Instead, I’d say there’s an area on this chart where I’d like to be long-term. Here’s what I mean by that.


If I am anywhere in the green area, I’ll call myself successfully FI. I call this area my “FIRE Goal” – the area of the chart that I’m aiming to live in for the rest of my life (once I get there).

It goes from a 25x savings multiple at a -50% savings rate to a 33x savings rate at a -100% savings rate.

For example, having a -50% savings rate and 25x savings multiple would mean spending $80,000 a year with $2,000,000 in savings, but having $40,000 of that spending come from new income.

At 33x savings, I’d need $2,666,666 saved up to take out that same $80,000 a year – but now without the need for any side income.

That bottom right area around 25x is still considered “FI”, but it’s not the kind of stable, never-need-to-think-or-worry FI. It’s lean FI, where you don’t have much wiggle room long-term. You can still leave your job then (as I did! oh yeah!) but you’ll need to tightly monitor your spending long-term and potentially change your spending in down years if you want this to last a lifetime.

It’s still a pretty amazing place to be (and it’s where I am today obviously), but it’s not a place with a solid and secure foundation.

What About You?

What’s your personal journey to FIRE look like? Does it include ups and downs, or is it more of a straight line? If you were to define your own

If you would like your own FIRE Matrix created I’ll do all the work of creating one for you! All you need to do is copy my template (the “Adam” sheet”) and fill it in with your own data and let me know with a link to your data. I’ll create a chart and add it here to this post with a link to your site (if you have one, or just a name if you don’t).

The only requirement is that you have at least 10 years of savings rate and savings multiple data. Any less than that and there won’t be enough data to make a proper graph.


Hi, I'm Adam! I help millennials invest to reach financial independence sooner than they ever thought possible. Want to see what you could do to reach FI sooner? You're in the right place!


Why not add to the conversation below? Your voice is welcome!

I have to disagree that you can’t save more than 100% of your take home. I dated an MD who was living very frugally on less than her 401k contribution limit. She had that and a 403b, both of which had 100% matching on the full balance. She saved quite a bit more than 100% of her income after the match!

That’s a seriously awesome amount of savings! I think it might come down to how you calculate savings rate.

To me it’s (total saved)/(total earned).

Total saved = Money put away into a savings/checking/401k/403b/brokerage + company match. Basically, anything that’s not spent at the end of the year.

Total earned = Any money paid to you. That includes the money you put into your 401k/403b/savings/checking AND the employer match.

Neither total saved nor total earned include dividends, capital gains, interest or any growth from investments. I consider those all in the category of “investment growth”.

By this definition, you can’t save more than you earn – because there wouldn’t be a place for that money to come from. Does that make sense?

Why does your graph look like a pterodactyl?

It does haha!

The first comment is by a velociraptor and the second is about pterodactyl. Maybe this is a sign I need to include more dinosaurs in my posts like Mr. 1500 Days. ?

The impact of taxes needs to be considered since your tax rate rises with your income, unless you’re assuming that all of these earnings are coming from a Roth, and even then it’s the contributions that are tax-free, not the gains. As lifestyle changes spending changes and can increase quite significantly (we have 2 kids, and college education ranges from city college at $30k to private at $300k). That said, agree that looking at a savings multiple of your spending is an elegant way to give yourself target, as is continuing to save while in the withdrawal phase.

Ah yeah, that’s a good point! If you have 25x saved up, but it’s all coming from a 401k, it likely won’t be nearly enough.

I like the idea of having multiple vertical lines to indicate savings goals. One could be enough for just the household expenses, one for one kid, another for another kid and any other expenses. It’s similar to the “FIRE Goal” area described based on all those future expenses.

In my opinion, I think it’s important to separate the emotions from investing. With the spread of the virus, it is very concerning, no doubt. How the market reacts to news, I can’t control. However, I can control how and when I invest, so I tend to focus on that.

However, I can control how and when I invest, so I tend to focus on that.

Very true!

Hi Adam, I like how you pointed out how much one saved up matters. Since we can’t predict the future, it is very best to save OR raise money if you have the means.



May 28, 2020

I came here accidently but thanks so much for your work 🙂 I will definately read more, ’cause I’m trying to decide what to invest in and then save some more 😉

Thanks Irena! Feel free to reach out if you have any questions. I’m always on the lookout for new things to write about!

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