Methodology

Your Freedom Number is built from a small number of widely used personal-finance building blocks. None of them are unique to this tool — what's unique is how they're composed and presented. This page documents them so you can judge the results for yourself.

1. The core formula

Freedom Number = required annual income ÷ safe withdrawal rate. The default 4% rate is based on the Trinity study; the tool lets you choose between 3%, 3.5%, 4%, and 5% to reflect more or less conservative assumptions.

2. Real returns, not nominal

All projections use real (inflation-adjusted) returns. You enter today's spending; growth assumptions of 5%, 6%, and 7% are net of inflation. This avoids the common mistake of double-counting inflation.

3. Monte Carlo sustainability

The sustainability panel runs a Monte Carlo simulation against your retirement spending, portfolio, and chosen volatility profile. It reports the probability that your portfolio survives the planning horizon. It does not model sequence-of-returns risk perfectly, tax-bracket changes, or behavioural responses to a downturn.

4. Scenarios and paths

Lean / Barista / Coast / Fat figures derive from the same formula with different spending and income inputs. They are useful as conceptual options, not as guaranteed pathways.

5. What it deliberately ignores

• Detailed tax planning across jurisdictions and account types.
• Healthcare cost trajectories specific to your country.
• Long-term care, disability, and other tail events.
• Behavioural risk — selling at the wrong time, lifestyle inflation, etc.

6. How to use it

Treat the Freedom Number as a directional target. The most useful number is rarely "is it $1.2M or $1.4M?" — it's "how much do my spending and savings rate move the answer?". Use the Scenario Lab to feel that sensitivity.

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