One of the most common questions we hear from new clients is: “How am I doing?”
Closely followed by: “Am I on the right track?”
These are comparison questions – and it makes sense why people ask them. It’s natural to want to compare yourself to others your age, or to benchmarks from the general financial media.
But at KB Financial Advisors, we don’t serve the general public. We serve individuals (primarily tech professionals) and that means our planning is personal.
Not based on where you should be at a certain age, but where you are in your career and where you want to go.
So instead of comparing you to someone else’s definition of financial success, let’s walk through how to define your own. Specifically, how to calculate your Financial Independence Number — the point where your job becomes optional.
What Is Financial Independence, Really?
When we talk about financial independence (FI), we don’t mean retiring early just for the sake of it. We mean hitting the point where you can stop working if you want to. Not because you hate your job, but because you’ve built enough of a financial foundation that you’re no longer dependent on your paycheck.
It’s not just a number. It’s freedom.
And we calculate your financial independence number in three different ways – from high-level to highly practical – depending on where you are in your career and your financial journey.
1. Net Worth as a Multiple of Your Income
This is the quickest and easiest way to get a read on your FI status — and often the most important. Why? Because it tells you two things:
- Whether you’re even close to financial independence.
- And whether your progress is coming more from saving more or from investment growth.
The magic financial independence number?
10x your income = financial independence.
So, if you make $200,000/year, FI is likely around $2 million in net worth.
But this isn’t all or nothing.
There are useful mile markers along the way:
- 1x your income: Critical mass — you’re in the game now.
- 3–5x: Progress feels fast. Your savings are doing the heavy lifting.
- 5–10x: Investment returns start taking over, but it doesn’t feel like you’re making progress — even though you are.
- 10x+: The “what ifs” start showing up. “What if I took a year off?” “What if I worked part-time?” At this point, most of those what-ifs… don’t really matter anymore. You’re in control.
This is just one lens. If your multiple is low, it’s a sign to keep saving. If it’s high, great! Now let’s dig deeper.
2. Future Earnings vs. Investment Portfolio
This is where we shift from net worth to the part of your finances you can actually live on: your investment portfolio. Then we compare it to what you could earn by working until age 65.
Here’s how it works:
Future Earnings = Current Salary × (65 – Your Age)
Let’s say you’re 42 and earn $270,000:
$270,000 × (65 – 42) = $6,210,000 in future earnings
Now compare that to your investment portfolio.
If your portfolio is less than $6.2 million, you’re not financially independent by this metric — continuing to work holds more financial value.
If your portfolio is more than your future earnings? That means your money is working harder than you are. You’re financially independent.
This method gives you a clear sense of the tradeoff: keep working and earn more, or pivot and let your portfolio support you.
3. The Safe Withdrawal Rate (SWR)
This is the most practical method – the “can I actually do this?” test.
Take your portfolio and multiply it by 5%. That’s how much you can likely withdraw each year in retirement without running out of money.
Example:
Portfolio: $5,000,000
5% SWR = $250,000/year
Now compare that number to your actual spending.
If you live on less than $250,000/year, congrats — you’re financially independent.
If you spend more than that, you may still need to keep working or adjust your plan.
We use 5% as a working number, not because it’s conservative, but because it balances sustainability with enjoying your money. Some research suggests 4% is safest, others argue for 6–7% based on spending flexibility and market conditions. In our experience, 5% is a solid planning number for our clients.
Once you pass this test, the conversation shifts from Can I? to Do I want to?
So… Can You Actually Do This?
If you’ve hit 10x income, have more in your portfolio than you’d earn by working, and your safe withdrawal rate covers your expenses, then yes.
You’re financially independent.
At that point, it’s not about whether you can stop working. It’s about designing a life you want and setting your portfolio up to support that shift.
Because the investment strategy for someone still earning is different from someone who’s living off their portfolio. You need cash flow. Reserves. A plan for market dips. That’s where the real planning starts.
Final Thoughts
There’s no one way to measure financial independence – and that’s the point.
Your FI number is personal. It changes based on your goals, your lifestyle, and your career plans. These three methods — Net Worth x Income, Future Earnings vs Portfolio, and Safe Withdrawal Rate – give you a layered view. From the big picture to the bottom line.
https://kbfinancialadvisors.com/contact-us/If you’re wondering how close you are, or what it would take to get there, we’d love to walk through the numbers with you.
