What’s Your Freedom Number? (5 Min Read) | Vol. 143

This mirrors the final chapter of a three-part wealth-building series on The ONE Thing podcast. You can follow along on Apple, Spotify, or YouTube.

March 21, 2025

“Financial wealth is available to you. No matter how little money or knowledge you have in the beginning, a great ending is possible for you.” – The Millionaire Real Estate Investor

What’s Your Freedom Number?

Over the past couple of weeks, I’ve been sharing a wealth-building framework with you. First, we covered the Path of Money—understanding the journey your money takes from earned to unearned income. Then we explored the 9 ½ Habits to Build Wealth on the habits that can shape your financial future.

Today, I want to complete this series with what might be the most important question of all: What’s your freedom number?

Your freedom number is the amount of unearned income you need annually to live your life mission without having to work. Financial freedom.

Imagine waking up every day knowing you don’t have to work to pay the bills. You can pursue your passions, spend time with loved ones, and contribute to causes you care about—all without financial pressure. 

That’s what the freedom number represents.

To create your map to financial freedom, you need to answer three questions:

1. Your current net worth: Where are you financially today? 
2. Your timeline to freedom: How long do you have to get there? 
3. Your freedom number: How much unearned income do you need? 

If you completed last week’s challenge, you calculated your net worth—the total of what you own minus what you owe. That’s your starting point.

Your timeline depends on your age and goals. Many people plan backward from age 65-72, but your timeline could be shorter or longer.

The freedom number is what we’re focusing on today.

Calculate Your Freedom Number

There are three approaches to determining your freedom number, depending on your mindset.

1) The Doable Approach

Financial advisors often suggest that in retirement, you’ll need about 80% of your current income. Why not 100%? Because certain expenses typically decrease: your home might be paid off, you’re not saving for retirement anymore, kids might be financially independent, etc. So take your current annual income and multiply it by 0.8. That’s your “doable” freedom number.

2) The Stretch Approach

Maybe you want more than just maintaining your current lifestyle. Perhaps you want to travel more, help family members, or simply enjoy more luxuries than you do now. For a stretch goal, take your “doable” number and double it. If your doable number was $80,000, your stretch goal would be $160,000 in annual unearned income.

3) The Possibilities Approach

This is where you dream big. Maybe you want to be a decamillionaire. Maybe you want $500,000 in passive income annually. There’s no ceiling here.

Just remember: the bigger the goal, the more important your “why” becomes. Without a compelling reason, you might not make the difficult choices required to reach ambitious targets.

Turning Income Goals into Net Worth Targets

Once you have your annual income goal, how do you determine the net worth you need to generate that income? Enter the 4% Rule.

Research by William Bengen in 1994 (and later validated by Trinity University researchers) found that if you withdraw just 4% of your investment portfolio annually, there’s a 95% chance your money will last 30+ years.

This gives us a simple formula: Annual Income ÷ 0.04 = Required Net Worth

Or even simpler: Annual Income × 25 = Required Net Worth

So if your freedom number is $80,000 in annual income, you’d need a net worth of $2 million ($80,000 × 25). 

Calculating Your Required Rate of Return

Now comes the critical part. How hard will your money have to work to get from where you are to where you want to be? In other words, what annual rate of return do you need? This is where most people go wrong. They have dreams of financial freedom but don’t ensure their investments can deliver the necessary returns. 

To calculate your required rate of return, I recommend using ChatGPT with this prompt:  

“What annual rate of return is needed for an initial investment of [YOUR CURRENT NET WORTH] to grow to [YOUR REQUIRED NET WORTH] over [YOUR TIMELINE IN YEARS], assuming compound growth?”

If you plan to continue investing regularly, add this to the prompt:

“…and I invest an additional [ANNUAL INVESTMENT AMOUNT] each year.”

This calculation is crucial because it tells you whether your current investment strategy is aligned with your goals.

Real-World Example

Let me share a simple example. Say you have $100,000 today and want $2 million in 25 years.

Using our ChatGPT prompt, you discover you need approximately a 12.5% annual return. That’s higher than what traditional stock market investments (8-10%) typically deliver. But if you add $15,000 in new investments annually, your required return drops to about 8.5%—much more achievable through traditional means.

This is why understanding the math matters. It shows you whether you need to:

• Invest more aggressively
• Lengthen your timeline
• Contribute more annually
• Adjust your freedom number

Your Map to Financial Freedom

The beauty of this approach is that it creates clarity. No more guessing or hoping. You know exactly what you need to do to reach your freedom number.

Will the path be perfectly straight? Of course not. Markets fluctuate, life happens, opportunities emerge. What having this map means is you’ll know if you’re generally on track or need to make major adjustments.

Remember—your freedom number isn’t set in stone. As your life changes, your goals may evolve. That’s fine. Just recalculate and adjust your course.

Here’s your homework. Download the Freedom Number worksheet at the1thing.com/freedomnumber and create your map to financial freedom.

If math makes you nervous, don’t worry. The worksheet will guide you through the process. You don’t need to be a financial expert—you just need to know your starting point, your destination, and how to use the tools available to plot your course. 

One question to ponder in your thinking time: If you woke up tomorrow with your freedom number fully funded, how would you invest your time differently?

Make an Impact!
Jay Papasan
Co-author of The ONE Thing & The Millionaire Real Estate Agent 

PS – As I noted on the podcast, this is for general informational purposes only. The views, thoughts, and opinions should not be construed as financial, economic, legal, tax, or other advice. This newsletter is provided without any warranty or guarantee of its accuracy, completeness, timeliness, or results from using the information.