Freedom Number Engine

Calculate, track, and model the user's path to financial independence — where passive income exceeds expenses and work becomes a choice, not a requirement.

Core Concept

The Freedom Number is NOT a net worth target. It's a monthly passive income target that covers living expenses without working. This is more actionable than a lump sum because it connects to daily reality.

Freedom Number = Monthly Essential Expenses × Safety Multiplier
Freedom Portfolio = Freedom Number × 12 / Safe Withdrawal Rate

Required Input

Minimum (can start with just this):

• Monthly essential expenses (or total monthly spending)
• Current investment portfolio value
• Monthly savings/investment amount

Enhanced (for detailed modeling):

• Expense breakdown (essential vs. discretionary)
• All account balances (taxable, IRA, Roth, 401k, HSA)
• Current income and expected trajectory
• Age and target freedom age
• Expected Social Security (if applicable)
• Pension or other guaranteed income
• Existing passive income (dividends, rental, etc.)

Calculation Framework

Step 1: Define the Freedom Number

Read references/freedom-math.md for detailed formulas.

Three tiers of freedom:

1. Lean Freedom: Essential expenses only (housing, food, insurance, utilities)
   • Safety multiplier: 1.0×
2. Comfortable Freedom: Essentials + moderate discretionary
   • Safety multiplier: 1.3×
3. Rich Freedom: Full current lifestyle + travel/luxury buffer
   • Safety multiplier: 1.6×

Present all three. Let the user choose their target.

Step 2: Current Passive Income Inventory

Calculate existing passive income streams:

• Dividend income (current yield × portfolio value in dividend-paying holdings)
• Interest income (HYSA, bonds, CDs)
• Rental income (if any)
• Other passive sources

Current Passive Income: $X,XXX/mo
Freedom Number: $X,XXX/mo
Freedom Progress: XX.X%

Step 3: Gap Analysis

Monthly Gap = Freedom Number - Current Passive Income
Portfolio Gap = (Monthly Gap × 12) / SWR - Current Portfolio
Time to Freedom = years until gap closes at current savings rate

Step 4: Scenario Modeling

Model at least 4 scenarios:

1. Base Case: Current trajectory, no changes
2. Optimized: Max all tax-advantaged accounts + implement tax alpha
3. Accelerated: Optimized + increase savings rate by 10%
4. Dream: What if income increases 20% OR side income added?

For each scenario, show:

• Years to freedom
• Monthly actions required
• Key assumptions

Step 5: Monte Carlo Simulation

Run 10,000 simulated paths using:

• Historical return distribution (mean 10%, std 18% for equities)
• Inflation uncertainty (2-5% range)
• Income growth uncertainty
• Sequence-of-returns risk
• Longevity risk (plan to age 95)

Report:

MONTE CARLO RESULTS (10,000 simulations)
Probability of freedom by target age:
  95th percentile: Age XX (best case)
  75th percentile: Age XX (likely optimistic)
  50th percentile: Age XX (median)
  25th percentile: Age XX (likely pessimistic)
  5th percentile:  Age XX (worst case)

Success rate at target age: XX%

Step 6: Acceleration Levers

Rank the top actions by impact on freedom date:

1. "Max Roth IRA ($7K/yr) → moves freedom X months closer"
2. "Mega Backdoor Roth ($36.5K/yr) → moves freedom X years closer"
3. "Implement tax alpha (~$3K/yr reinvested) → moves freedom X months closer"
4. "Increase savings rate by 5% → moves freedom X months closer"
5. "Negotiate $15K raise → moves freedom X months closer"

Output Format

YOUR FREEDOM DASHBOARD
═══════════════════════
Freedom Number (Comfortable): $X,XXX/month
Current Passive Income: $X,XXX/month
Freedom Progress: ████████░░░░░░░░ XX.X%

FREEDOM TIMELINE
Base case:      XX years (age XX)
Optimized:      XX years (age XX) ← recommended
Accelerated:    XX years (age XX)

MONTE CARLO: XX% probability of freedom by age XX

TOP 3 ACCELERATION LEVERS
1. [Action] — saves [X months/years]
2. [Action] — saves [X months/years]
3. [Action] — saves [X months/years]

NEXT MILESTONE: $X,XXX/month passive income (XX% of freedom)

After presenting results, offer: "Want a Freedom Card you can save or share? It shows your progress without revealing personal details." If yes, generate an HTML artifact based on the template at skills/share-cards/references/freedom-card-template.html, customized with their actual freedom percentage, monthly target, and timeline.

Always chain: "Want me to set up a weekly pulse to track your freedom progress? Or model a specific scenario?"

Profile Integration

Before starting analysis, check for the user's financial profile:

1. Read profile/financial-identity.md for age and income
2. Read profile/holdings.md for current portfolio value
3. Read profile/goals.md for Freedom Number target (if established)
4. Read profile/history.md for prior Freedom Number calculations and refinements

If profile exists, use these to pre-populate the analysis:

• Pre-calculate current passive income streams using portfolio data
• Compare current progress to prior calculations
• Avoid re-asking for data already in profile

If profile doesn't exist, proceed normally and offer to save:

• The calculated Freedom Number and target age
• Current passive income baseline
• Monthly actions needed to reach freedom

After completing analysis, append a summary to profile/history.md:

## [Date] — Freedom Number
- **Action**: [What the user asked - revised estimate, new scenario, etc.]
- **Key findings**: [Current passive income, Freedom Number tier chosen, years to freedom]
- **Recommendations**: [Top acceleration levers identified, next milestone]

Important Notes

• Freedom ≠ retirement. Frame it as "work becomes optional" not "stop working"
• Always show the compound effect of small changes
• Social Security is a bonus, not a plan — model with and without it
• Disclaimer: "This is analytical modeling, not financial advice. Actual results will vary."
• For users under 40, emphasize Roth accounts (decades of tax-free growth)
• For users over 50, include catch-up contribution limits