How Close Are You to Financial Freedom?
The 4% Rule Might Give You a Clearer Answer Than You Think
One of the most common frustrations I hear from people who are already earning well is this: “I’m investing, I’m putting money away, I’m doing something but how do I truly know how close I am to financial freedom?” Most people assume financial independence only “counts” when they hit the full number. But progress can be measured today, not emotionally, but mathematically using something simple: the 4% rule. Traditionally, this rule estimates how much income you can safely draw from your investments in retirement. But there’s another powerful way to use it: as a progress indicator.
Application of the 4% Guideline:
1.The “Income Meter” – A Simple Way to Measure Your Progress
When most people think about financial independence, they focus on the full target amount the big number and it feels overwhelming. But using the 4% rule, you can break it down into something more visual and easier to grasp. Instead of seeing a giant lump sum, you’re able to see how your current investments translate into future income. This creates what I call an “income meter” a way to see how far you’ve already come.
Here’s a simple example:
If the lifestyle you want requires $80,000 per year
Then at 4%, that means a target of about $2 million invested
If you already have $500,000 invested
That already supports around $20,000 per year at 4%
Which means you’re already 25% of the way there
When you see it like that, the journey stops feeling like a giant leap. It becomes something you can measure like watching a fuel gauge slowly move toward full. Each year, each contribution, each smart decision pushes the meter higher and that makes progress feel real, not theoretical.
2. Reverse-Engineering Your Goal
Instead of asking, “How much do I need to retire?” ask, “How much income do I want my money to produce every year?” This flips the mental model. We stop thinking in one huge total sum that feels heavy and instead we target a lifestyle outcome. People stay more engaged when they measure progress by life impact, not by a giant number looming over them.
3. Milestones Build Motivation
Big financial goals can feel overwhelming, especially when the finish line is years away. Breaking the target goals into meaningful stages can give a different level of flexibility.
at around 25% funded — breathing room
at 50% funded — part-time becomes optional
at 75% funded — work becomes optional
at 100% funded — financial independence
This framing matters because each milestone represents increasing choice. Choice is the real currency of freedom.
The Cost of Waiting Is Often Invisible
Many people fear making the wrong financial move but the bigger danger is doing nothing at all. Waiting for the “perfect moment” can mean forfeiting years of compounding growth, tax benefits, or market opportunity. Time is the only resource we cannot replenish. A one-year delay doesn’t just cost one year, it compounds into decades of lost growth.
So How Close Are You, Really?
If you can identify two numbers the annual lifestyle you’re aiming for, and the amount you currently have invested you can already estimate where you are on the path to financial freedom. For many people, the result is far more encouraging than they expect. Progress is often closer than it feels.
Note: The 4% rule is a guideline not a guarantee. It’s based on historical data, long-term assumptions and diversified portfolios.
(reference: https://www.forbes.com/sites/jlange/2025/10/23/bill-bengens-new-safe-withdrawal-rate-a-175-raise-for-retirees/)
Disclaimer: This is general advice only and does not take into account your personal circumstances. Seek professional advice before making financial decisions.