What Is Your Financial Freedom Number — And Are You Sure You Know It? 

Most people approaching retirement have a rough figure in their head. A number that feels like “enough.” The problem? That number is almost always wrong — not because people aren’t smart, but because the inputs are far more complicated than a calculator or a quick Google search can capture.

In a recent episode of Dime After Dime, host Tony Stich sits down with Moran Wealth Management financial planner Julie Rich to break down what the financial freedom number actually is, why so many investors get it wrong, and what it takes to truly arrive at a figure you can trust.

The Financial Freedom Number, Defined

At its most basic, the financial freedom number is the amount of money you need accumulated — and properly deployed — to sustain your desired lifestyle throughout retirement without running out of money.

Simple enough in concept. In practice, it’s one of the most nuanced calculations in personal finance.

“Some people might need $60,000 to live,” Julie notes in the episode. “Some people might need $260,000 to live. It really depends on so many factors — where do you live, what are your financial goals, do you want to leave a legacy behind, what are your healthcare needs. The list goes on.”

A Quick-Start Calculation (And Its Limits)

For those who want a ballpark without running a full financial plan, Julie offers a straightforward formula:

• Identify your annual retirement spending target 
• Subtract your expected income sources (Social Security, pension, etc.) 
• Multiply that shortfall by 25 

That final figure is a rough proxy for the portfolio you’d need to fund the gap. And for most people, the number is larger than they expect — which is precisely the point. The shock of that first calculation is often what opens the door to more serious planning.

But as Julie is quick to note, the 25x method is a starting point, not a finish line. It doesn’t account for taxes, healthcare inflation, market volatility, long-term care, or the spending reality most households don’t want to admit.

The Three Costs Most Investors Systematically Underestimate

1. Healthcare — And Its Accelerating Inflation Rate

Healthcare is consistently the most underestimated line item in retirement planning. According to Julie, the average couple who retires at 65 can expect to spend approximately $300,000 on healthcare costs over their lifetime in retirement — and that figure doesn’t include long-term care.¹

What makes this especially dangerous is the inflation rate. General inflation historically runs around 3%. Healthcare inflation runs closer to 6% annually — double the broader rate. That means a healthcare expense that costs $1,000 today costs roughly $3,200 in 20 years.²

“If we’re inflating healthcare costs at 6% a year, which is the industry norm, that number by the time you need it is a very large number,” Julie says. “So it is very eye-opening.”

She adds that competitor plans she’s reviewed often use 2.5% general inflation — a figure she considers optimistic to the point of misleading. Her standard is 3.25%.

2. Longevity — The Risk No One Wants to Plan For

Retirement planning used to assume a 20-year horizon. Modern statistics tell a different story. For a couple both retiring at 65, there’s a strong probability that at least one partner lives to age 93, according to figures referenced in the episode.³

A 28-year retirement funded by a portfolio stress-tested for 15 is a plan waiting to fail. Longevity isn’t just a personal milestone — it’s a financial risk that has to be modeled explicitly.

3. Taxes — The Bill That Doesn’t Go Away

Many retirees assume that once their W-2 income disappears, so does their tax burden. That’s a costly misconception.

“The whole adage of using your after-tax accounts first and letting your IRAs grow until you absolutely need to take money out of them is really outdated,” Julie explains. Required minimum distributions (RMDs), currently triggered at age 73 and scheduled to rise to 75, can push retirees into higher brackets precisely when they’re least prepared for it.

The smarter approach: model withdrawals from multiple account types (traditional IRA, Roth, taxable) every single year to level out the tax load across your retirement. Julie cites research suggesting that being strategic about withdrawal sequencing can save up to 15% in taxes over the course of a lifetime — a figure that, on a $2 million portfolio, translates to $300,000.⁴

Roth conversions are a key lever here. By converting portions of a traditional IRA in lower-income years, investors can reduce the eventual RMD balance and avoid bracket creep in their later years.

Why Return Assumptions Matter More Than You Think

One of the more pointed moments in the episode comes when Julie addresses the financial plans she’s seen from competitors — the ones presented in “beautiful leather binders” with performance assumptions built on the last 15 years of market returns.

“Some financial planners do use historical performance numbers, which I think is a little irresponsible,” she says directly. “Based on where valuations are right now, we probably won’t see another 15 years like that.”

The lesson: an overly optimistic rate of return doesn’t just produce a rosy projection. It produces a plan that quietly fails — and you may not find out until it’s too late to course-correct.

Conservative assumptions, paired with regular updates, are worth far more than a confident number that doesn’t hold.

If You’re Behind: Three Levers

If the honest math reveals a gap between where you are and where you need to be, Julie is straightforward about the options:

1. Spend less in retirement than you planned
2. Save more between now and retirement 
3. Retire later — even working two to three additional years materially changes the math, as you’re contributing longer, letting investments compound further, and drawing down the portfolio for fewer years 

There’s no fourth option. But that clarity is actually useful — it removes ambiguity and puts the decision squarely in your hands.

What “Financially Free” Actually Requires

Reaching your number isn’t the end of the process. It’s the beginning of a different phase of management.

Julie describes annual reviews with clients that assess life changes — new grandchildren, family caregiving responsibilities, a shift in spending priorities — alongside Monte Carlo analysis, which runs thousands of market scenarios to generate a probability of plan success. The further you are from retirement, the wider those probability bands; the closer you get, the tighter and more meaningful the confidence interval becomes.

Perhaps most practically: she encourages clients to engage with their planning software directly, running their own what-if scenarios between formal reviews. Some clients check it nearly every day.

“It’s not a one-and-done type process,” she says.

The Spending Blind Spot

There’s one final issue the episode addresses — and it may be the most common stumbling block of all.

Many people genuinely don’t know what they spend. They have a number in mind. But when Julie works backwards — taking income, removing pre-tax savings, removing taxes, removing any additional savings — the residual figure is often surprisingly large.

“No way do I spend that much,” is the typical response.

“Then where is it going?” is her reply.

Understanding your true spending baseline is the essential first input to any credible financial freedom number. Without it, even the most sophisticated planning software is working with bad data.

The Bottom Line

The financial freedom number is real, it’s calculable, and it’s within reach — but it requires honest inputs, conservative assumptions, and regular recalibration. General inflation, healthcare inflation, longevity risk, tax sequencing, market volatility, and long-term care all pull on that number in ways that a spreadsheet or a quick online estimate simply can’t capture.

That’s the case Julie makes, and it’s a compelling one.