The rule of thumb that you can withdraw about 4% of your portfolio every year — adjusted for inflation — and it will likely last. Flip it around and financial freedom needs 25× your annual spending.
The 4% figure comes from the Trinity Study, which tested portfolios of stocks and bonds across US market history. Withdrawing 4% (1 ÷ 0.04 = 25) survived every historical 30-year period. Withdraw more aggressively and the odds of running out rise sharply; withdraw less and your margin of safety grows.
| Monthly spend | Annual spend | Freedom target (25×) |
|---|---|---|
| $2,000 | $24,000 | $600,000 |
| $3,000 | $36,000 | $900,000 |
| $4,000 | $48,000 | $1,200,000 |
| $5,000 | $60,000 | $1,500,000 |