How to track your progress to financial independence

1. The target: one division, one honest input

The arithmetic of a FIRE number is famously short:

target = annual spending ÷ withdrawal rate

Someone spending $2,500 a month spends $30,000 a year. At the conventional 4% withdrawal rate — the Trinity-study inheritance — the target is $750,000. The division is not the hard part. The hard part is that both inputs are usually wrong:

• The spending figure is a guess. Most people estimate their monthly spending from memory and land 15–30% low, because memory drops the annual insurance bill, the flights, the dentist. A target computed from a flattering guess is a flattering target. Track actual spending for a few months before you let the number mean anything.
• The rate is a choice, presented as a law. It isn't one. Here is the same $30,000 of spending at four rates:

A higher rate means a smaller target, not a safer plan. The useful discipline is to keep all four rows visible while you track: the distance between "aggressive me" and "conservative me" is itself information — for this spender, half a million dollars of it.

2. Years to arrival: the formula behind every FIRE calculator

A target without a date is a wish. The date comes from three inputs — what you have (PV), what you add per month (PMT), and what you assume it grows at (annual rate g, so monthly r = g/12) — and one line of algebra. The months to a target T:

n = ln( (T·r + PMT) / (PV·r + PMT) ) ÷ ln(1 + r)

This is the standard annuity future-value equation solved for time; it is what sits inside essentially every FIRE calculator on the internet, disclosed or not. For our example — PV = $63,380, PMT = $1,550, g = 7% — the four targets come out to:

Two rules make this number worth tracking rather than admiring:

Use your measured pace, not your planned one. The $1,550 above should be an average of deposits that actually happened — imported from statements, not typed in on an optimistic day. A plan is a target; a measured average is a fact; the ETA built on the plan flatters you exactly when you are falling behind. (This is the same discipline as separating contributions from market growth: facts first, opinions labelled.)

Keep the assumptions on the same screen as the answer. "~16.1 years" is not a fact about the future; it is the output of 7%-nominal-growth-and-current-pace. Shown together, that is a calculation you can interrogate. Shown apart, it is a horoscope with decimals.

3. What the target is made of — and why growth dominates

Take the 4% row apart. If the $750,000 arrives in 194 months, it arrives in exactly three pieces:

More than half of this target is money nobody will ever deposit. That is not a flaw in the plan — it is the plan; it is what "let compounding do the work" looks like when you write it down. But it has two consequences worth staring at:

• The largest slice of the target is also the least certain one, because it is manufactured entirely by the growth assumption. This is why the sensitivity check below is not optional.
• Early on, the split runs the other way — deposits dominate and growth is a rounding error. If your tracker shows the composition over time, you can watch the handover happen: the year the portfolio starts out-earning your contributions is, for most people, the year the whole project starts feeling real.

4. The coast point: the day contributions become optional

Somewhere between zero and the target sits a quieter milestone: the portfolio size from which compounding alone reaches the target by the same date, with no further deposits. The FIRE community calls it Coast FIRE. It is the target discounted back over the plan's own horizon at the plan's own rate:

coast = T ÷ (1 + r)ⁿ

For the $750,000 target 194 months out at 7%: 750,000 ÷ (1 + 0.07/12)¹⁹⁴ ≈ $243,000. Our example portfolio, at $63,380, is 26% of the way there.

The coast point matters because it is the first date on the whole timeline where anything actually changes. Before it, deposits are structurally required. After it, they only move the date — which converts "I must keep contributing for sixteen years" into "I must keep contributing until the coast point, and after that it is a choice." For anyone whose income is volatile — freelancers, founders, anyone between countries — that reframing is worth more than the final date itself.

5. Dividend coverage: the same goal, measured in income

The target above measures independence in capital. There is a second lens: what share of your spending the portfolio's income already pays. If your holdings throw off $1,800 a year net and you spend $30,000, you are 6% independent — today, verifiably, with no growth assumption involved.

coverage = net annual dividends ÷ annual spending

The operative word is net. Gross dividend yield is the number funds advertise; what arrives is what survives two layers of tax — withholding at the fund's domicile, then tax at your residence. For a non-US investor in US-domiciled funds the first layer alone is 15–30% of every distribution, money that never reaches the account. Coverage computed on gross yield overstates your independence by exactly the tax you forgot.

Coverage is slower-moving and less dramatic than the capital ratio — for an accumulation portfolio in index funds it will sit in single digits for years. Its virtue is that it cannot be flattered by a bull market: prices rising 30% moves the capital ratio a lot and coverage barely at all. When the two disagree about your progress, believe coverage.

6. Sensitivity: what one percentage point does to the date

Every number since section 2 leans on the growth assumption, so the last measurement is: how hard?

Re-run the same formula at 6% instead of 7%. The $750,000 target moves from ~16.1 years to ~17.4 years — the arrival slides from 2042 to around 2044. One percentage point of return, held for the whole journey, costs this saver about fifteen months of working life. Run it the other way and 8% delivers the target correspondingly sooner.

Two things follow:

• A projection is a calculation under one assumption, not a schedule. The honest way to draw one is with the uncertainty visible — a range of arrival dates, or at minimum the alternative-return date printed next to the headline one. A single confident line ending on a single confident year is the visual grammar of a promise nobody can make.
• Late in the journey, the assumption matters more than you do. Because growth compounds on itself, the gap between a 6% world and a 7% world widens every year. Early on, your contribution pace dominates and the assumption is almost irrelevant — one more reason the pace, the one input you control, deserves the most careful measurement.

7. What crossing a border does to all five

Everything above works in any country. What changes when you live outside the country your funds are domiciled in — the situation BorderFolio exists for — is that three of the five measurements silently pick up a country dependency:

• The target is built on spending, and spending is priced in a place. Moving from a $2,500/mo city to a $1,700/mo one drops the 4% target from $750,000 to $510,000 — years off the timeline without saving an extra dollar. The honest way to evaluate a move is to recompute the whole table, not to guess.
• Dividend coverage is net of two tax layers, and both depend on residences: withholding on the fund-domicile↔residence pair, home tax on the residence alone. The same portfolio is 6% independent in one country and 5% in another — see the withholding methodology for how the per-fund rate is resolved.
• The pace is earned in a currency and invested in another. Convert historic contributions at today's rate and your measured pace resizes itself every time the currency moves; flows belong at the rate of their own date.

This is why a domestic FIRE calculator undershoots for expats: it treats the country as a constant, and for this audience the country is a variable — often the variable. Modelled properly, "what does moving to Portugal do to my date" becomes a column you can compute rather than a forum thread you can read.

8. A tracking checklist

Monthly, after the statement lands — same cadence as performance, and mostly the same evening:

• Spending, actual — the input everything else is divided by. Re-measure it occasionally; targets built on last year's spending expire.
• The target at your rate, with the neighbouring rates visible — so the choice of rate stays a visible choice.
• Measured contribution pace — from real deposits, not the plan. If the pace fell, the ETA should say so this month, not next year.
• Years to arrival, with its assumptions printed beside it — growth rate and pace, on the same screen.
• Composition of the target — watch the growth slice take over from the contribution slice.
• Distance to the coast point — the first milestone where anything changes.
• Dividend coverage, net of both tax layers — the measurement a bull market cannot flatter.
• The date at growth − 1% — if the plan only works in the good scenario, better to learn it now.

A spreadsheet can compute every formula in this article — they are all here deliberately. What a spreadsheet cannot do is keep the inputs honest: the measured pace drifts from reality the first month you forget to log a deposit, and the net dividend figure requires a withholding rate per fund that most people never look up. BorderFolio's Independence page runs this exact set — target at 3–6%, dated arrival from the measured pace, composition, coast point, coverage net of both layers, and residence scenarios — on the same confirmed transactions the rest of the tracker uses, with every assumption printed on the page it affects.

FAQ

Is my FIRE number before or after tax?

The spending you divide by should be gross of the taxes you will pay on withdrawals and investment income in retirement, and those depend on your residence at the time. A common approach is to add an estimated effective tax rate to the spending figure. What is not defensible is dividing after-tax spending by a withdrawal rate calibrated on pre-tax history and calling the result safe.

Should I count my home in the portfolio?

Only assets that can pay for spending belong in the numerator. A home you live in reduces your spending (no rent) rather than funding it — put it on the spending side of the equation, not the portfolio side. Counting it twice is the single most common way people discover their number was fiction.

My contribution pace is irregular — freelance income. What pace do I use?

A trailing average of real deposits over a window long enough to smooth the lumps — twelve months is common. The point of a measured pace is that it self-corrects: three lean months pull the average and the ETA down, and no honesty is required of you beyond importing the statements.

What growth rate should I assume?

Long-run global equity returns have historically landed around 7% nominal before costs; many planners use 5% real. The specific number matters less than three disciplines: state it, hold it constant so the timeline moves only when reality does, and check the date at one point lower. A plan that survives the minus-one-percent check is a plan; one that doesn't is a hope with a spreadsheet.

Where can I track all of this on my own portfolio?

BorderFolio computes the full set on your imported statements — the target from your spending at 3–6% withdrawal rates, years to arrival from your measured pace, composition, coast point, dividend coverage net of withholding and home tax, and residence/spending scenarios. The free tier covers one portfolio with up to ten holdings and three statement imports a month.