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Money 101 · 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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Not financial advice. This is for educational purposes only. I am not a financial advisor. Always do your own research and consult a qualified advisor before investing.
Look... 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. Once you know it, every financial decision becomes clearer. Multiply it by 25 and you have your retirement number. Your freedom number. The number at which money stops being the reason you make decisions.
"The moment you know your retirement number, every financial decision becomes clearer. Every coffee, every subscription, every raise — you see them differently."
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, gives you the portfolio size at which you are mathematically free. You can stop working. The returns on your portfolio cover your expenses indefinitely.
The Formula
Annual Expenses × 25
=
Your Retirement Number
Example: €30,000 / $30,000 annual expenses
= €750,000 / $750,000
Look... the 25x rule comes directly 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 balanced portfolio could sustain a 4% annual withdrawal for 30+ years across almost all historical market conditions.
In plain terms: if your annual expenses equal 4% of your total portfolio, your portfolio can sustain those withdrawals indefinitely. And 4% is simply 1 divided by 25 — which is why your retirement number is your annual expenses multiplied by 25.
Look... once you know your retirement 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?" These are very different questions — and the second one has a specific, actionable answer.
Knowing your number also changes how you think about spending. Every unnecessary expense is not just money leaving your account — it is money that is not compounding toward your freedom number. That shift in perspective is one of the most powerful things this episode creates.
What is the 4% rule?
The 4% rule states that a portfolio in a balanced mix of stocks and bonds can sustain annual withdrawals of 4% of its initial value for at least 30 years, across almost all historical market conditions. It comes from the Trinity Study — a 1994 research paper analysing historical market data.
Is the 4% rule still valid in 2026?
The 4% rule was designed for a 30-year retirement. For longer retirements, some researchers suggest a more conservative 3–3.5% withdrawal rate. It remains one of the most widely referenced frameworks in retirement planning, though personal circumstances vary significantly.
How much do I need to retire at 50?
Using the 4% rule, multiply your expected annual expenses by 25. If you need €30,000 per year, your retirement number is €750,000. However, retiring at 50 means a potentially longer retirement — some financial planners suggest a more conservative multiplier of 30-33x for early retirement scenarios.
What is a FIRE number?
Your FIRE number — Financial Independence, Retire Early number — is the same as your retirement number: your annual expenses multiplied by 25. It is the portfolio value at which your investments generate enough returns to cover your living expenses indefinitely.