Behold. The Financial Independence Grid.

This grid shows how long it will take you to achieve financial independence (25 times your annual expenses) based on your post-tax annual income and expenses. The grid assumes you start with a net worth of $0, earn 5% investment returns on your savings each year, and that income and expenses remain consistent each year.

A little over a year ago I shared the early retirement grid, which topped out at $100k on the income scale so I decided to recreate the grid with a max income of $250k to account for high earners. After all, nearly one in four households in the U.S. earn more than $100k annually.

How to Interpret This Grid: An Example

Suppose your household earns $70k per year and spends $40k per year. This means you have $30k left over each year to invest.

Assuming your investments earn 5% annual returns, it will take you 20.1 years to save up $1 million (25 times your annual spending).

Savings Rate: The Most Important Metric

Your savings rate is the one metric that determines how fast you can achieve financial independence.

Notice how a household that earns $100k per year and saves half of their income can achieve F.I. in 16.6 years. A household that earns only $60k per year and saves half of their income can also achieve F.I. in 16.6 years.

The numbers are even more encouraging when you look at scenarios with over 50% savings rates. Consider a household that earns $100k per year and only spends $40k per year. Based on the grid, they can achieve F.I. in only 12.4 years.

On the flip side, a high income can be completely offset by excessive spending. A household that earns $250k per year will have to work for 51.4 years to reach financial independence if they spend $225k each year.

Some Interesting Observations

You can achieve financial independence in about 7 years with a 75% annual savings rate at any income level.

You can achieve F.I. in 10 years with a 66% annual savings rate at any income level.

A 50-year-old with a net worth of $0 could achieve F.I. by age 67 with a 50% annual savings rate.

A 23-year-old college grad could achieve F.I. by age 40 by saving 50% of their income each year.

A 23-year-old college grad could achieve F.I. by age 55 by saving only 25% of their income each year.

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.