As India prepares to celebrate its 80th Independence Day on 15 August, investors can also think about another form of freedom: financial independence. Your “freedom number” is not a fixed ₹5 crore or ₹10 crore target.
Your “freedom number” depends on how much you spend, when you plan to retire, inflation, outstanding debt, family responsibilities, and healthcare needs.
A freedom number is broadly the corpus an individual needs to support their desired lifestyle and meet future financial obligations without depending on active income.
Siddharth Maurya, Managing Director, Vibhvangal Anukulara Pvt Ltd, said there is “no universal freedom number for all investors”. The required corpus has to be calculated based on an individual’s expected expenses and responsibilities.
For example, Maurya considered a 35-year-old investor spending ₹1 lakh a month today and planning to retire at 60. At different inflation rates, the monthly expense at retirement could rise substantially:
Using a simple benchmark of roughly 25 times annual expenditure, Maurya estimates that the required retirement corpus could range from about ₹8 crore to ₹12.9 crore, depending on the inflation assumption.
Your retirement corpus cannot be calculated only on the basis of regular household expenses. Outstanding liabilities can also alter the target.
“Debt and dependents impact the required retirement corpus as well,” Maurya said. For instance, if an investor expects to need ₹40 lakh at retirement to clear a home loan, that amount needs to be factored into the overall retirement requirement.
This means two investors with identical monthly expenses could have very different freedom numbers if one enters retirement debt-free while the other still has a significant loan outstanding.
Family responsibilities can also push the freedom number higher. Maurya highlighted education as an example.
“If a child's education costs ₹25 lakh today, an 8% annual inflation rate would take the future requirement to approximately ₹54 lakh,” he added.
Therefore, investors should separately account for large and time-bound goals such as:
Healthcare is another expense that can significantly affect financial independence because medical costs can rise faster than general household spending.
Maurya gave an example where ₹15 lakh earmarked for healthcare today could grow to about ₹64 lakh over 25 years at 6% annual inflation.
He stressed that this healthcare corpus should be in addition to adequate health insurance, rather than being treated as a substitute for insurance.