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Finance · Episode 6
There is one number that determines whether you are financially free or financially trapped. Most people spend their entire lives without ever finding out what it is. Multiply it by 25 and everything changes.
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Most people think about retirement as something vague and distant — something they'll figure out later. This episode is about making it concrete, specific and actionable. Because once you know your number, everything changes.
The number is your annual living expenses — how much money you actually need to live your life for one year. Not what you earn. Not what you save. What you spend. That number, multiplied by 25, is the portfolio size at which you are mathematically free. You can stop working. The returns on your portfolio cover your expenses indefinitely.
"The moment you know your number, every financial decision becomes clearer. Every coffee, every subscription, every raise — you start to see them differently."
It comes from the 4% rule — one of the most studied findings in personal finance history. Researchers at Trinity University analysed decades of historical market data and found that a portfolio withdrawing 4% per year survived virtually every historical market condition over a 30-year period. If you can live on 4% of your portfolio per year, your money effectively lasts forever. And 4% is simply 1 divided by 25 — which is why your retirement number is your annual expenses multiplied by 25.
Once you know your number you stop thinking about retirement as an age and start thinking about it as a target. You stop asking "when can I retire?" and start asking "how do I reach my number?" Those are very different questions — and the second one has a specific, actionable answer.
Mike built a free Retirement Freedom Calculator that does all of this automatically. Enter your expenses, your current savings and your monthly contribution — and get your number, your year-by-year projection and your monthly income at retirement in seconds.