How much do you need to feel that you have financial freedom? As financial planners, we use very powerful cashflow analysis software to see if you can live the life that you want without running out of money. The software is a great tool but has its limits. We use assumptions to calculate future costs and pay for events out of different assets along the way. Those assumptions may turn out to be wrong, that is why we recommend you keep you finances up to date
A great tool that we have is how much can we spend each year without running out of money. In calculating this, we will look at all your defined benefit and defined contribution pensions, savings & investments, rental income etc. Every source of income you will have for the rest of your life. We will also look at all your expenditures, from the cost of running the household to any big purchases you may want to make.
While the software shows how much you can spend and not run out of money, it doesn’t deal with how you feel. Having money and assets gives you financial security, a sense of comfort and confidence.
How much are you willing to let your assets deplete to before you start asking yourself if you have enough money. Consider you are bidding for a house. You have sold your family home and are downsizing. Part of the proceeds are to partly fund your retirement and the rest is to be used to buy a new home. But you get into a bidding war. The financial planning software tells you how much you can spend. Does that tally with how you feel though? Do you feel confident that you can do whatever you want and not worry about running out of money.
You want to enter retirement with financial freedom. You want to be able to treat yourself and your family without worrying about running out of money. To do that, you need to have adequate liquid assets. There is no exact amount that I can give you as everything is relative to what you started off with and people are all different with the amount they need as a comfort blanket so they feel comfortable with their spending.
Steven Barrett
16 February 2026