Protection Status
9_Calculators_Financial-Freedom-1024x683 How much money do I need to be financially free?

How much money do I need to be financially free? Get the answer here!

Financial freedom, for most people, is a very vague concept. What is it? How much do you need? When will you get there? Most people don’t have an answer to these questions. Well, not anymore. By the end of this blog, you’ll know exactly how much money you need to be financially free; to be able to quit your job and pursue whatever you want in life. And I will also share one Calculator to help you calculate this FINANCIAL FREEDOM TARGET.

Your FINANCIAL FREEDOM TARGET is the sum of two numbers

  1. WANTS TARGET: This is the amount of money you need to fulfil all the big desires you have–a car, house, education for the kids, fancy holidays, etc. Anything that you desire but is not a need or necessity is what I call a WANT. 
  2. FREEDOM TARGET: This is the corpus you need to get through retirement–a sufficient sum that will generate enough income to take care of all your expenses in retirement. So you don’t need to work for money if you don’t want to. 

This calculator will help you determine both these targets. You can dive right in or read ahead to understand what exactly we will be doing.


A want is something important to have but not absolutely necessary. A car, holidays abroad, a home, an executive program, a college education for kids, etc. 

  • List all your major wants and how much each costs presently. 
  • To be more precise, estimate when you want it and the cost at that time. For simplicity, you can assume 10% inflation. 
  • The total is your WANTS TARGET. In the below example, it is Rs. 80 lakh.


  •   Latest phone, currently Rs. 1L, needed soon, future cost: Rs. 1L
  •   Car: currently Rs. 8L, needed in 4 years, future cost: Rs. 11L
  •   Executive Program: currently Rs. 5L, needed in 6 years, future cost: Rs. 8L
  •   College education for a child: currently Rs. 30L, needed in 10 years, future cost: Rs. 60L
  •   WANTS TARGET (total future cost) = Rs. 80L (1+11+8+60)


This is the corpus you need to retire and the income it generates will be enough to cover your living expenses in retirement. 

  • Assume you have already retired–where are you living and what are your annual expenses? 
  • Multiply the number by 50. That is your FREEDOM TARGET. In the below example (someone hypothetically retired in Goa) it is Rs. 12L X 50 = Rs. 6 cr


Budget in Goa: Rent: Rs. 4L, Groceries: Rs. 2L, Medical: Rs. 1.5L, Dining/Entertainment: Rs. 1.5L. Travel: Rs. 2L, Misc.: Rs. 1L. TOTAL: Rs. 12L

A corpus of Rs 6 cr, even if it earns you a low post-tax 4% p.a., will generate an income of Rs. 24L p.a. The current requirement is only Rs. 12L p.a., so this number includes buffers for inflation, longevity, market downturns etc. Importantly, the corpus is left untouched, year after year.


Your ultimate goal, the FINANCIAL FREEDOM TARGET, is the sum of your WANTS and FREEDOM targets. In our example, it is Rs. 80L+ Rs.6 cr = Rs. 6.8 cr. Achieve this ultimate goal, and you have “enough” money to achieve all your wants and retire, even without any additional sources of income. 

This simplistic calculation has assumptions on inflation, returns, etc., but it gives you a good starting point. And as circumstances change, you can keep refining this number. So go ahead and calculate your FINANCIAL FREEDOM TARGET. How does it look? Achievable? Don’t be disheartened if it seems difficult. There’s a lot you can do, especially if you have time on your side. And having a tangible target to gun for is a big first step! 

Like it? Share with your friends!



Your email address will not be published. Required fields are marked *