Your Path to Financial Independence
If you stopped working today, would your portfolio, passive income, and other resources cover your living expenses for the rest of your life?
At StillWater Financial Advisors, we believe true financial planning isn’t about numbers alone – it’s about the individual person. Your story, your values, and your vision for the future make up the compass that guides your financial decisions. One of the most common goals I hear in client and prospect conversations is financial independence. But what does that really mean, how do you know when you’ve arrived, and what practical steps can you take today to move closer to it?
What Is Financial Independence?
Financial independence means reaching the point where your resources can sustain your desired lifestyle without depending on a certain level of new income outside of investments. In other words, work becomes optional—you can choose to work because you want to, not because you have to.
But notice the phrase “desired lifestyle.” That’s where the ever-important life planning piece comes in. Independence doesn’t look the same for everyone:
For one family, it may mean living comfortably and traveling twice a year.
For another, it might mean generous giving to causes close to their heart while keeping life simple at home.
For others, it could mean an elevated lifestyle—vacation homes, luxury travel, and more—which naturally requires more resources to sustain.
For yet another, it might be leaving a large legacy for their kids and grandkids to get to experience more things in life
Financial independence is ultimately about aligning your resources with what matters most to you, not just hitting a random number. Once you know your target, you want to take as little risk as possible that will still get you across the finish line. From there, it’s about life choices and tradeoffs.
“Financial independence is about freedom—freedom to spend more time with family, freedom to serve in meaningful ways, freedom to live aligned with your values. ”
How Do You Know When You’ve Reached It?
The simple test is this: If you stopped working today, would your portfolio, passive income, and other resources cover your living expenses for the rest of your life?
Some signs you may have reached financial independence:
Your investment portfolio generates sustainable withdrawals to meet your lifestyle needs.
You have little or no debt.
You’re not anxious about market swings because your plan is resilient.
Your spending aligns with what you’ve identified as “enough,” not just what’s possible.
This is where lifestyle financial planning matters. It’s not about comparing yourself to neighbors or coworkers—it’s about clarity on what’s truly important for you and your family. It doesn’t matter how your investment returns or standard of living compare to others, it’s about whether your approach meets your unique needs.
The “Elevated Lifestyle” Challenge
One of the greatest threats to financial independence is lifestyle creep. As income grows, so do expectations—nicer cars, bigger homes, more expensive vacations. It’s natural to want to enjoy the fruits of your hard work, but each increase in lifestyle raises the bar of what’s required for independence.
We often ask clients: “How much is enough?” Clarity here protects you from unintentionally moving the finish line. Without this awareness, you may never feel financially independent—even when you technically are. Saving for an undefined future is like going on vacation with no destination. How will you know if you’ve arrived?
How to Calculate Financial Independence
While every plan is personal, there are a few common ways to calculate financial independence.
The Rule of 25
A popular shortcut is to multiply your annual spending by 25. If you plan to spend $120,000 per year, you will need around $3 million invested to maintain that lifestyle using a 4% withdrawal rate. The spending number can be reduced by other expected sources of recurring income like Social Security and pensions.
Withdrawal Rate Analysis
Instead of one blanket number, we can model different withdrawal rates (3–5%) and stress test them against market conditions. This provides a range of confidence based on spending levels and investment allocations.
Cash Flow Mapping
We review expected income streams—Social Security, pensions, rental properties, business income—and align them with projected expenses. The gap is what your investments need to cover.
Advanced Considerations for Higher Net Worth Families
Tax-efficient withdrawals: Coordinating Roth conversions, charitable giving strategies, and capital gain/loss harvesting.
Bucket strategies: Segmenting investments into short-, mid-, and long-term needs for stability and growth.
Estate and legacy planning: Ensuring your independence includes provisions for heirs and causes you care about. Making sure heirs are prepared to handle the money intentionally & responsibly. Also avoiding estate tax issues
Best Practices to Identify Where You Are
Here are practical steps you can take today:
Track Your Lifestyle Spending
Most people underestimate what they spend. Review the past 12 months and categorize needs, wants, and luxuries. This becomes your baseline.Define Your “Enough”
Ask yourself: What lifestyle would bring contentment and freedom without comparison? For many, it’s less than they think—but knowing that number provides confidence.Evaluate Your Resources
Add up investments, retirement accounts, real estate equity, business value, and other assets. Then map them against your spending.Run a Financial Independence Projection
A professional plan can model different retirement ages, spending levels, and market conditions. This helps you see how close you are and what adjustments may be needed.Stress-Test the Plan
Ask: What happens if inflation stays high? If the market drops 30%? If I want to retire five years earlier? Running “what if” scenarios gives peace of mind. StillWater uses financial planning software to take the calculation work off your plate.
Next Steps on Your Journey
Every journey is unique, but common action steps include:
Build margin now.
Save aggressively while earning well. Higher savings rates accelerate independence far more than chasing investment returns. The earlier you start, the easier reaching your goals become – thank you compound interest!
Eliminate unnecessary debt.
Independence is harder to reach if your lifestyle is tied to large, fixed obligations. Getting out of debt is the goal, speed of payoff is negotiable. A strong case can be made to pay off all debt with a >7% interest rate.
Invest intentionally.
Align investments to your time horizon, risk tolerance, and values. Avoid emotional decisions.
Revisit regularly.
Independence isn’t a one-time calculation. Life changes, markets move, and goals evolve. Annual reviews create accountability and keep you on track.
Many of our clients want their independence to include giving to family, causes, or both. Tools like donor-advised funds, charitable trusts, and appreciated asset gifts can expand your charitable impact while reducing taxes. Family gifts don’t offer tax breaks but still require careful planning and communication.
Final Thought
Financial independence is a worthy goal—but it’s also a deeply personal one. Whether your vision is simple living, elevated lifestyle, or creating a lasting legacy, the key is clarity. Avoid the comparison trap, define your “enough”, build a plan to get there, and revisit it along the way.
Take Action - Your financial story is unique. Where you’ve been, where you are, and where you want to go all matter. That’s why we practice Lifestyle Financial Planning. If our approach resonates with you and you are interested in starting a conversation to see if we are the right partner to help you define and reach financial independence—we’d love to meet you and learn about your story, your values, and your vision for the future.
