Calculating Freedom Days
It is always nice to be able to find a new way to track your progress, and better yet it can be really great when you have a tracker available that can feel more realistic when you do look at it. If anything, at least it will help to keep the motivation going. While it might be nice to see that you are 30%, 50% or 70% through to obtaining your FIRE number, it can sometimes be difficult to realise what these numbers represent.
I was watching a video on YouTube recently and they were showing a way of tracking using “Freedom Days”, where there is a calculator available on Engaging Data to be able to see how many days of the year your current savings amount will allow you to last through the year.
There is nothing too fancy going on with the calculations, it just takes your FIRE number, divides it by 365, and this remaining number represents the amount of savings you require for every day of freedom. Your total savings divided by this daily amount required becomes your total number of “Freedom Days”.
Inputs
There are only three inputs required:
- Current Savings
- Annual Spending
- Safe Withdrawal Rate (%)
Now it is time to put in my numbers.
Current Savings: $877,435.19 (this does not include my Superannuation or my non passive income producing assets that I used to calculate my Net Worth)
Annual Spending: $60,000.00 (this is a bit higher than I am expecting to spend, but I am anticipating to be in my own PPOR for my retirement, which is currently not the case, so I have allowed additional cost for rent)
SWR: 4.00%
Results
According to this, I can last just over half a year with my current situation.
I think it is a really interesting visualisation to be able to see how much progress I have already made on my journey, and how I am close to being on the home stretch to reach FIRE.
If I included my Superannuation, it would have me lasting up until 3rd September as well.
Freedom Growth Over Time
Another feature you can do is look at number of days over a multi-period to help provide some visualisation on how I am progressing over time.
Similar inputs, but this time there will be several “Savings Amounts” and different time periods associated with each one.
Unfortunately, I did not track my numbers as well as I could have until the past year or so, but I should at least be able to have rough estimates from my Net Worth Tracker.
A lot of the numbers through the years are only estimates as well, and I did not have a breakdown of my superannuation at the time either, so again it is only an educated guess. I do not believe it really matters as for the purposes of this exercise it should be close enough to what I need.
It appears that each year I am obtaining roughly an additional month of Freedom Days, which is good news as it would say I am approximately 5 years away from reaching FIRE (which is my goal).
It would have been good if I did have an accurate breakdown over time, I would really be able to see where I had great years investment wise or when I had less than great years. That is one regret I have about not tracking my net worth earlier, but at least better late than never.
Summary
There are several ways you can use to track your progress through FIRE, I normally just use a % number, it seems to work for me. But I do like this approach of using “Freedom Days” as it really creates a nice visual to see the progress you have made so far, and how much more progress you have to go.