How Much Should You Save to Achieve Financial Freedom

Also, a comparison of the 25 times rule and Fidelity's recommended savings amounts

How Much Should You Save to Achieve Financial Freedom

Financial freedom is a highly sought-after goal for many individuals, offering the ability to live life on one's terms without relying on a regular paycheck or external financial assistance. Achieving financial freedom is a journey that requires planning, discipline, and a clear understanding of your financial goals. In this blog post, we'll discuss the concept of financial freedom, and provide recommendations on how much money you should aim to save to achieve it.

What is Financial Freedom?

Financial freedom refers to a state where an individual or a household has enough income, savings, and investments to sustain their desired lifestyle without being dependent on employment or external financial assistance. It allows people to make choices based on their preferences and passions, rather than financial constraints. The concept of financial freedom can vary from person to person, as it depends on individual goals, lifestyle choices, and financial responsibilities.

Estimating Your Savings Needs for Financial Freedom

There is no one-size-fits-all answer to how much money someone needs to achieve financial freedom, as it depends on several factors such as lifestyle, location, spending habits, and financial goals. However, a common guideline used in financial planning is the "25 times rule," which suggests that you should aim to have 25 times your annual expenses saved before retiring or achieving financial freedom.

To estimate the amount you need, consider the following steps:

  • Calculate your annual expenses.
  • Adjust for lifestyle changes.
  • Factor in inflation.
  • Apply the 25 times rule.

Remember that this rule is just a guideline and may not be suitable for everyone. Your personal circumstances, risk tolerance, and investment strategy will also play a role in determining how much you need to save.

Fidelity's Pre-Retirement Savings Recommendations

Fidelity, a prominent financial services company, provides general guidelines for retirement savings based on age. These recommendations are intended to help individuals gauge whether they are on track with their retirement savings. Here's a summary of Fidelity's recommendations:

  • By age 30: Aim to have saved at least 1x your annual salary.
  • By age 35: Aim to have saved at least 2x your annual salary.
  • By age 40: Aim to have saved at least 3x your annual salary.
  • By age 45: Aim to have saved at least 4x your annual salary.
  • By age 50: Aim to have saved at least 6x your annual salary.
  • By age 55: Aim to have saved at least 7x your annual salary.
  • By age 60: Aim to have saved at least 8x your annual salary.

Keep in mind that these guidelines are general and might not be suitable for everyone. Personal circumstances, such as income growth rate, risk tolerance, and retirement goals, can impact the amount you need to save.

The 25 Times Rule VS Fidelity's Recommendations

Both the 25 times rule and Fidelity's recommendations are guidelines to help individuals estimate how much they should save for retirement or financial freedom. However, there are key differences between these two approaches that may influence which method is more suitable for a person's unique financial situation.

Basis of calculation

The 25 times rule is based on your annual expenses, whereas Fidelity's recommendations are based on your annual salary. While the 25 times rule focuses on the lifestyle you want to maintain during retirement or financial freedom, Fidelity's approach is centered around your current income level. Depending on your spending habits and lifestyle choices, one approach may be more appropriate than the other.

Age-specific milestones

Fidelity's recommendations provide age-specific milestones to help individuals gauge their progress towards their retirement savings goals. This can be particularly helpful for those who want to track their progress over time or make adjustments as their circumstances change. On the other hand, the 25 times rule provides a general target but does not offer guidance on how to reach that target at different life stages.


The 25 times rule allows for more flexibility in terms of adjusting your savings target based on your unique lifestyle choices and expenses. It enables you to tailor your savings goal according to your specific needs and priorities. Fidelity's recommendations, while helpful, may not account for significant changes in lifestyle or expenses that could occur during retirement.

Inflation and income growth

The 25 times rule considers the impact of inflation on future expenses, which is an essential factor to account for when planning for retirement. Fidelity's recommendations, while based on salary multiples, do not explicitly account for inflation or income growth. It's crucial to factor in these elements when determining your savings goals, as they can significantly impact your retirement nest egg.

Both the 25 times rule and Fidelity's recommendations are useful starting points when planning for retirement or financial freedom. It's essential to evaluate your personal financial situation, goals, and lifestyle preferences to determine which approach is more suitable for you.


Achieving financial freedom requires a combination of planning, saving, investing, and managing your finances responsibly. It's essential to reassess your financial goals regularly and make adjustments as needed. Consulting with a financial planner or advisor can help you create a personalized plan tailored to your individual needs and goals. With the right approach and a clear vision of your financial future, you can work towards achieving financial freedom and enjoying the lifestyle you desire.

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