A self-possessed adult woman in a clean, high-end editorial setting for Your Freedom Number.

23 / 25 · Your Freedom Number

She is not chasing a fashionable number. She is calculating the life she wants a portfolio to help fund.

A freedom number is a planning relationship: annual spending divided by a chosen withdrawal-rate assumption. It is useful precisely because its assumptions are visible.

The lesson

€40,000 a year turns into €1,000,000 at 4%.

The first input is not the portfolio. It is the annual cost of the life you want to support. At €40,000 a year, dividing by a 4% planning withdrawal rate produces €1,000,000.

Change the rate to 3% and the same €40,000 requires €1,333,333. That €333,333 jump is why a withdrawal rate is not a decorative detail; it is an assumption about uncertainty, time and margin.

The arithmetic does not forecast a safe income. Real planning needs taxes, inflation, pensions, healthcare, family, longevity and the possibility that markets behave badly at the beginning.

€40,000ANNUAL SPENDING

€1,000,000AT 4%

€1,333,333AT 3%

Make the target explicit

Change spending and the planning rate.

A planning equation, not a withdrawal promise. Use it to make assumptions visible before building a local, personal plan.

See the curve

The number changes when
the planning rate changes.

Capital needed to fund €40,000 of annual spending under four simple planning assumptions.

Capital required

The number changes when the planning rate changes.
PLANNING WITHDRAWAL RATE	Capital required
3%	1333333
4%	1000000
5%	800000
6%	666667

Annual spending to fund

Planning withdrawal rate

Illustrated capital target

Monthly spending

Target one point lower

Continue with any AI assistant

Build a cautious freedom-number worksheet

Help me create a cautious financial-freedom planning worksheet. Ask about my annual spending, housing, dependants, healthcare, taxes, public and private pensions, debt, emergency cash, retirement age and desired flexibility. Show how several withdrawal-rate assumptions change the capital target, but do not present any rate as guaranteed or recommend securities.

Assumptions

The model is annual spending divided by a planning withdrawal rate; it does not simulate an investment portfolio.
It excludes tax, inflation, returns, fees, public or private pensions, health costs, longevity and changes in spending.
Use local tax and retirement planning expertise before acting on a real target.