Most people wonder how much they need in savings in order to be financially free. Following matrix will give you an indication.
Calculate multiple of Income for Age/Income, based on below matrix. E.g. If you currently earn $150,000/y at the age of 45, your savings should stand at a multiple 4.8 of your income. A total of $720,000
Source: J.P.Morgan Asset Management
| Age: | $50,000 | $75,000 | $100,000 | $150,000 | $200,000 | $250,000 | $300,000 |
|---|---|---|---|---|---|---|---|
| 35 | 0.9 | 1.6 | 2.0 | 2.6 | 3.0 | 3.4 | 3.5 |
| 40 | 1.6 | 2.4 | 2.9 | 3.6 | 4.2 | 4.6 | 4.8 |
| 45 | 2.5 | 3.4 | 4.0 | 4.8 | 5.5 | 6.0 | 6.2 |
| 50 | 3.5 | 4.6 | 5.3 | 6.3 | 7.1 | 7.7 | 8.0 |
| 55 | 4.7 | 6.0 | 6.9 | 8.1 | 9.1 | 9.7 | 10.1 |
| 60 | 6.2 | 7.7 | 8.8 | 10.2 | 11.4 | 12.2 | 12.6 |
| 65 | 8.1 | 10.0 | 11.3 | 13.0 | 14.5 | 15.5 | 16.0 |
Keep in mind, above matrix and calculation are just an indication where your savings should be, considering your age and income. Take into account your yearly expenses and inflation. Personal expenses vary from person to person. Therefore each individual will have a different personal target for Financial Freedom.