The 4% Rule: Your Ticket to Financial Freedom

Published: October 20, 2025

Imagine waking up every morning knowing you never have to work for money again — not because you won the lottery, but because your investments generate enough passive income to cover all your living expenses. That’s financial independence.

But how much do you actually need to reach that point? There’s a simple, time-tested principle that gives you the answer.

🎯 What Is the 4% Rule?

The 4% Rule suggests that you can safely withdraw 4% of your investment portfolio each year — with a very high probability that your money will last for the rest of your life.

🔢 How It Helps: Find Your “Freedom Number”

The beauty of this rule lies in its simplicity. You can easily reverse it to calculate how much you’ll need to reach financial independence.

How much do you spend annually? Multiply that amount by 25 (because 1 / 0.04 = 25).

Example

Suppose you want to live on $40,000 per year. Multiply by 25 → you’ll need a portfolio of $1,000,000 to retire safely.

🤔 Any Caveats?

• Not a law of physics: it’s based on historical data — future returns may vary.
• Inflation matters: the rule assumes you adjust withdrawals each year.
• Taxes count: your after-tax income may differ from projections.

👉 Try our Financial Freedom Planner and calculate your own “Freedom Number” with real data. Get it on the App Store