How is a Freedom Score actually computed for a 32-year-old software engineer?
Scenario
Priya, 32, Bengaluru software engineer, ₹15L annual income, ₹40L corpus, ₹25K monthly SIP, six-month emergency fund, ₹2Cr term cover, ₹40L home loan
Inputs
- Age
- 32
- Inflation %
- 6
- Retirement age
- 60
- Term cover INR
- 2,00,00,000
- Monthly sip INR
- 25000
- Health cover INR
- 15,00,000
- Annual income INR
- 15,00,000
- Assumed return %
- 11
- Current corpus INR
- 40,00,000
- Annual expenses INR
- 8,00,000
- Emi % of takehome
- 28
- Emergency fund months
- 6
- Sip months uninterrupted
- 48
- Home loan outstanding INR
- 40,00,000
Calculation
- 1.
Annual expenses at retirement (inflation-adjusted, 28 yrs of 6%)
₹8L × (1.06)^28 → ₹40.90 L
- 2.
FI corpus needed at 3.5% SWR
₹40.9L ÷ 0.035 → ₹11.69 Cr
- 3.
FI Progress = current corpus ÷ FI corpus, capped at 40 pts
(₹40L ÷ ₹11.69Cr) × 40 → 1.4pts
- 4.
Compounding Quality (real return 5%, 48-mo SIP, balanced mix)
composite 0–40 scale → 32pts
- 5.
Resilience (6-mo emergency, 13× term cover, 28% EMI)
composite 0–20 scale → 17pts
- 6.
Composite Freedom Score (sum of three components)
1.4 + 32 + 17 → 50.4pts → Freedom tier
Conclusion
Freedom Score = 50.4 → Freedom tier. Despite only 3.4% FI Progress, Priya is on a strong trajectory because Compounding Quality and Resilience are both high.
Tradeoffs
The score is trajectory-forward, not state-only. Same person with no insurance, no emergency fund, and ₹3L credit card debt would score around 18 (Security tier) despite the same ₹40L corpus.