Calculating my Savings Rate with the Swan FIRE Prowess

I recently came across a new metric, the Green Swan’s FIRE Prowess Score, to measure my progress in achieving financial independence / early retirement. It’s an interesting twist on a savings rate calculation. Like many savings rate metrics, it is tied to your gross income (pre-tax), but the amount that you save is your change in net worth.

The Formula

It is calculated as:

Annual Change in Net Worth ($)
Annual Gross Income ($)

The thing I like about this formula is that is builds in a measure that combines your gross income with your net worth growth.  The ratio takes into account growth in equities and retirement. For more specifics on the basic thoughts read TGS’s article about it.

Comparison of Savings Rates

To show the difference between this metric and a regular savings rate, I’ve created a  couple rough scenarios and tables using a theoretical person who has these stats:

  • Savings rate of 10%, 20%, 30%, or 40% every year for up to 40 years of working
  • Annual equity growth on savings of 7%
  • Annual income growth rate of 2.5%

I really like to benchmark how I’m doing versus a goal, which is why I made this. The assumptions are pretty crude, but I think for a general goal this is good.

Swan FIRE Score by Savings Rate

Swan FIRE Score by Savings Rate and years of working.

As you can see in the graph over time, the person’s Swan score continues to scale even though their savings rate is steady.  I think it really demonstrates compounding growth and the importance of earlier savings versus later savings. Here’s a link to the spreadsheet I used so that you can play around with some of the assumptions Swan FIRE Score by Savings Rate.

My Score vs the Standard Savings Rates

I’ve been working 6 years after college so far, and my usual results vary between 0.41 and has grown to 0.71 for my project year ending score. My lifetime rate has been 0.54. I’m using some data pieced together from the Social Security Administration on how much I earned each year, and then my net worth readings are from end of year. According to TGS, my score is good and will bring me on the track to FIRE eventually. I’ve decided that my target comparison rate is with the 40% savings rate scenario.

My Swan score vs the theoretical goals.

As you can see in the graph, my performance has been at or above that rate for the past 7 years. Full disclosure, my actual savings rate varies between 40% to 50%, but I like to sand bag my goals. In addition, the last 6 years looks great partially because of the booming stock market. But let’s say this was 2008, the metric would be depressingly negative. I think overall this is a good metric, because it definitely gives some standards to reach for. I’ll probably keep a log updated every now and then with this score.

Read Related Posts

A few other bloggers are also running related posts on topic, so we all got together to post at the same time. This way you can get a diverse perspective on it.

  1. Anchor: The Green Swan – The Swan’s FIRE Prowess Gauge 2016: the one who started it all. 132% Lifetime: 93%
  2. the Retirement Manifesto – Is Your Wealth Building On Track?. A big thanks to Retirement Manifesto for setting this up! 2016: 57% Lifetime: 44%
  3. OthalaFehu – My Swan FIRE Prowess Numbers Othalafehu has 10 years of personal data including the recession. 2016: 72% Lifetime: 61%
  4. Budget On A Stick – My FIRE Prowess Score 2016: 52% Lifetime: 55%

  5. DadsDollarsDebts: DDD’s FIRE Prowess Score 2016: 26% Lifetime 32%
  6. Debts To Riches – My FIRE Prowess Report Card 2016: 29% Lifetime 43%
  7. Adventure Rich – The Adventure Rich FIRE Prowess Score 2016: 45% Lifetime 47%
  8. Freedom Is Groovy – The Groovies FIRE Prowess Score 2016: 163% Lifetime 90%
  9. Working Optional – Calculate Your Progress To Financial Freedom 2016: 97% Lifetime 75%
  10. Life Zemplified – FIRE Prowess Score for Life Zemplified 2016: 78% Lifetime 76%
  11. Physician’s Wealth Services – Physician Wealth’s FIRE Prowess 2016: 43% Lifetime 46%
  12. Married And Harried – Married And Harried FIRE Prowess Score 2016: 32% Lifetime 14%
  13. Ms. Liz Money Matters – Introducing the FIRE Prowess Score 2016 279% Lifetime 72%
  14. Actuary On Fire: The Swan’s FIRE Prowess Gauge – My Results 2016 61% Lifetime 59%
  15. Budgets Are Sexy – My Total Lifetime Wealth Ratio: 2016: 135% Lifetime 60%
  16. Trail to FI: FIRE Prowess Score, Trail to FI Edition 2016: 34% Lifetime: 53%
  17. Maximum Cents: Maximum Cents’ FIRE Prowess Score 2016: 94% Lifetime: 70%
  18. Retiring On My Terms: ROMT’s FIRE Prowess 2016: 119% Lifetime: 57%
  19. Minafi: The Minafi FIRE Prowess Score 2016: 74% Lifetime: 94%
  20. Military Dollar: FIRE Prowess Scores & How to Correct for Military Paychecks 2016 81% Lifetime 83%
  21. Finance Yo Self: FIRE Prowess Score for Finance Yo Self 2016: 44% Lifetime: 44%
  22. The 7 Circles: FIRE Prowess Gauge 2016: 246% Lifetime: 219%
  23. Money Metagame: The Good, Bad & Ugly of the FIRE Prowess Gauge 2016: 108% Lifetime 68%

Tracking Summer Cooling Costs

My energy usage has sky rocketed 95% percent year over year this summer.

The big change this summer has been that I finally live in a place with central air conditioning. It’s like living in the future. I’ve lived in places without central air conditioning–or dishwashers– for the past few years to cut costs. The weather around Chicago isn’t too bad, so I’ve been making do with a bunch of fans and a small window unit air conditioner.  I guess my cheapskate system of cooling down only a single room should be more efficient; I just never thought it would be twice as energy efficient.

For the past 3 months, I’m roughly tracking at 760 kWh this year versus 388 kWh last year.  The weather here in Illinois didn’t start to ramp up until June, which is when the air conditioner started to kick on constantly.  Seeing the June electricity bill kicked some sense into me. I wasn’t tracking usage to closely until I saw the cost and the numbers.  I was afraid that July would be even worse, so I started to dig into the data to see what I could do.

Energy Usage Data

For reference, I live in a 2 bedroom condo surrounded by other condos.  The building is brick and at least a hundred years old but with newer window, so it’s not terribly insulated. I generally keep the thermostat set to 75 degrees with schedules around times when people will be home or not.

My energy provider has a really detailed chart of energy usage by day or hour and with overlays for the temperature. As you can see from the graphs, my baseline energy usage is about $0.30 / day or roughly 3-4 kWh per day. On the days that the AC is running more, my costs/usage multiply 5x per day.

Here’s a day where I was working from home and waited to turn on the AC until the thermostat hit 78 degrees.   Lights, applicants, computers, and what not were all on the at 1pm.  All of these things barely used any energy compared to 2pm when I switched on the cooling system.

Now that I knew that the air handler and air conditioner were giant energy hogs, I started to watch the thermostat like a hawk. Previously, I was a little lazy about turning it on and off or managing the schedule. I didn’t realize that a couple hours of AC could use as much energy as the rest of my condo for the day.  I also dragged my array of fans out of storage.

Future Energy Management Steps

So I feel a lot better now that July’s pretty much over and I was able to bring the energy usage down to a more reasonable level.  I’ve thought about getting a Nest, because the scheduling system on my thermostat is kind of clunky.

I used to think a lot about getting energy efficient lights and unplugging appliances when I leave.  But all those things are small potatoes compared to my cooling system.  At this point, I’m thinking about looking into getting our system checked out. It’s about 10-11 years old, so it’s starting to approach the end of it’s life.

Don’t risk your entire retirement on a hunch.

Here is a cautionary tale of why you should be careful when trying to out fox the stock market. Last week, many people risked their life savings betting everything that Rite-Aid’s stock would shoot up from $3.50 all the way up to the $6.50 / share that Walgreens was offering. If the merger were to happen Walgreens would pay the $6.50 for every share of Rite-Aid stock–nearly a 100% gain. People were betting that the Republican-led FTC would approve the merger, and allow the 2 companies to create the nation’s largest drugstore chain.    Don’t let your greed blind you though. There was a reason that Rite-Aid’s stock was so far below the offer price–the deal was unlikely to pass the regulators.

Turns out Walgreens decided to pull out of the deal last Thursday, and Rite-Aid stock has since dropped to $2.50.   Here are 2 Wall street better’s who went all in.

“The Insider”

This gentleman is a part-time pharmacist at Rite Aid. The internal emails that he received gave him confidence to make a bet on the merger going thru. This probably was not a great decision, since any information disclosed to the front-line workers on the merger were probably also released to the general public via the FTC, SEC or their investor relations website. The stock market reacted to all that information by valuing Rite-Aid far far below the offer price.

He made a nearly $200,000 bet on this. From his original purchase price of $3.20 he has lost nearly 22% in the past week.

Thankfully, he’s a pharmacist so he’ll probably survive despite this bad move.

The $125k YOLO

He bet $125,000 on a hunch at $3.83 / share. With the current share price of $2.50, he has lost over one third of his investment. That equals $42,000, more than the annual incomes of many Americans.


Both of these investors made posts regretting their decisions. I think that it’s important to remember that if something seems too good to be true, it’s probably going to screw you over so be careful. These 2 investors purchased shares with no options to buffer their potential losses. If you’re going to make a life changing decision like betting hundreds of thousands of dollars on a single stock trade, you should probably try to cover your self with some kind of downside protection like a professional investor would.

Net worth of the middle class from 1992 – 2013

One recurring request for the net worth percentile calculator on this website to show a break down of what makes up that net worth value. Here it is for a typical middle class household!

Here are the results of that request for a typical middle class household with comparisons for the past 20 years.  The overall trend for the shows that net worth has increased slightly, but assets and debts have also increased at almost the same rate.

Housing is by far the largest contributor to middle class wealth with investments contributing a far lower amount. In 2013, real estate contributed 54% of net worth ($110k in real estate assets – $64k in real estate related loans).

Net worth peaked in 2007 prior to the recession, and as of 2013 has not recovered yet. The 2016 data should be available over the summer in a few months, so we’ll see if the downward trend continues.

Net Worth Component Definitions

  • Real Estate : House(s) and other real estate
  • Investments : Retirement funds, stocks, mutual funds, stock options
  • Low Risk Investments : Cash, bonds, CD’s, and cash value of life insurance
  • Other Assets : Cars and other assets
  • Real Estate Debt : Mortgages and other real estate related loans
  • Student Loans and Auto Loans : These were already combined in the source data as installment loans.
  • Credit Cards and Other Debt : Credit cards and other debt

The data is sourced from the Federal Reserve and all values are adjusted for inflation to 2013 dollars.  The 2016 data will be published over the summer and I am planning to update the calculators and this chart to show additional trends.

We used the data for the 40-60th percentiles to create a weighted average net worth of what makes up the wealth of an average household, and to represent the middle class. Because it is a weighted average (mean), the net worth values are skewed slightly higher than a median based calculation.

Summary Table of Net Worth for the Middle Class

Note: these values are adjusted for inflation into 2013 dollars.

Year Total Assets Total Debt Median Net Worth
1992 $131,000 ($48,603) $82,397
1995 $152,434 ($63,897) $88,537
1998 $171,146 ($67,091) $104,054
2001 $185,715 ($68,590) $117,125
2004 $213,655 ($93,009) $120,646
2007 $250,588 ($111,403) $139,185
2010 $185,185 ($97,994) $87,191
2013 $161,126 ($76,052) $85,074

If the graph doesn’t load here is an image:

Measuring and Tracking your Financial Progress

The best thing about tracking and setting goals is that you are in total control of what you want to track and how you want to track it. At work, I typically have goals and metrics cascaded down to me from above whether or not I agree with those metrics and goals. For my personal finances it’s freeing to be able to set my own goals and decide how I want to measure success. Read on for examples of metrics and processes that you could use to track your financial goals and progress.

How I’m tracking this year

For this year, I decided to set my goals by loading my planned spending, income, and net worth in MadFienst’s lab and compare my end of month actuals to the plan. As each month goes by, I overwrite the planned numbers with actuals. Here’s an example graph with actuals thru March.

Planned and actual

How other people are tracking their goals and measuring their stats

I frequent the Rockstar Finance Forums and one of the things I wanted to find out was how others measure their financial success. I reached out to some of my fellow forum goers to get some new ideas. Here some of them.

setting targets

1. Setting SMART goals (specific, measurable, achievable, relevant, timely)

To recap, in 2017 I’ll measure how I’m doing financially on the following goals:

  • Increase year-over-year net worth growth with 50%
  • Invest 10% of my take-home pay in the stock market
  • Establish a concrete plan for building a new source of income

Probably not the most ambitious goals for a year, but I’m content with setting goals that’ll allow me to spend little time thinking about finances right now. The first two are done more or less by the “autopilot” I’ve set up to manage my finances. –

Better Goals for A Better Year – Abovare

2. Tracking year over year percentage increases

I do a monthly Net Worth check up and use the value $10,000 as my over/under on a good month. That would represent about 7/10’s of 1% increase. If I hit it 12 months a year I get an annual up 8.3%, I am good with that. I also do a year to year comparison in October (have been for 10 years) to see what % I am up for the year compared to other years. This fluctuates a lot but averages, 21.9% up a year. Year Over Year Net Worth – Othala Fehu

3. Focusing in on simple goals like generating passive income

I keep things simple. Long ago I worked out what it costs to be me, to live my life largely how I want it to be. Bollocks to frugality and minimalism and all that compromise.

I then set about building a passive income generating machine to fund that lifestyle.

In a given month where I earn more than I need, I do the happy dance and embarrass the hell out of my kids.

Alternatively should I earn less than that I curse the financial gods, before slapping myself upside the head for not being accountable for my own f*ck ups. Then I go figure out where things went awry.

Usually it is something simple like a void period between tenancies, or the result of a significant splurge such as an extended holiday.

On the rare occasion that it isn’t so easily explained I go looking for the underlying reason… maybe lifestyle inflation, or perhaps an increase in fees or interest rates or whatever.

In summary: Celebrate the small wins, which means if you’re doing it right you’ll be celebrating often. When you’re not figure out why, then do something about it. And repeat. Cantankerous.life

4. Managing spending

We mainly look at our spending. We automated our investments and only invest in index funds so the investing part is pretty straight forward. On the spending side, we focus on our biggest expenses and try to cut down all the fluff. Open Book Frugal – Our Financial Path

5. Managing debt and looking forward to milestones

I do a monthly net worth check and want my net worth to go up more than the previous month’s change. Now that I’m out of the bad debt repayment portion of my plan and more into the stock market, that is sometimes difficult with the crazy market fluctuations. So to keep it going up, I’ve got to keep paying more into savings/investments and to keep paying down the “good” debt.

I also look to hit some major milestones every year and if I don’t, I don’t consider it a success. Things like max out 401k contributions and increase in savings/non-retirement investments. I also have some spending goals like home renovations and car purchases that I want to pay for in cash. And a cool vacation for the mental break from everything!80-20 Your Finances

6. Publicly tracking and reporting on your status

For the last couple months I have been doing a monthly net worth check and, this month I started posting it on my blog http://buybackfreedom.com/march-monthly-report/3

I also posted my goals, they are very simple at the moment, I want to hit a net worth number by the end of the year and I want to invest 3k into dividend yielding stocks. Every month from now on I’ll simply look at how much time there is left in the year to see if I’m saving enough or if I need to bump that number up next month. Buy Back Freedom

7. Using Mint to budget and track spending

This is an awesome idea for a post. I track our budget closely with Mint to make sure we’re staying on track with our spending. I also track our net worth each month using Mint and Personal Capital. Based on what we’re spending, how much money we’re putting towards our debt, and how much our net worth has grown, I get a good idea on whether we’re continuing in the right direction.

Here’s a post where I talk about my goals for 2017:End of Year Review & 2017 Goals – Spill Spot

8. Using personalized spreadsheets of spending.

I use Personal Capital and lots of Spreadsheets. I track monthly spending, update net worth monthly, and track net worth growth goals year over year, and I also have a retirement accounts growth projection / goal tracker with a countdown to what we need. Life Zemplified

9. Being analytic to create rolling averages to track progress versus budget.

We track our income, expenses, and net worth in Quicken and monthly we prepare a spreadsheet to show our progress compared to our budget, including a rolling 12-month average of actual expenditures in each category. We then make revisions when necessary to get us back on track to achieving our desired results. Our 5 Big Personal Finance Goals for 2017 – Super Savings Tips

9. Tracking net worth and tracking cash flows

I measure my net worth each month, and have done for some years.

I’m reasonably relaxed about investments ups and downs, but monitor our cash movements like a hawk!

i.e. we should be £x up this month, but we’re only £y – why? I allow for regular savings etc, but I expect our monthly cash to build each month, until I move it to an ISA / savings account, so if it hasn’t gone up as much as I expect – time for a deep dive!Cracking Retirement