What does 'financial independence' mean?

Financial independence refers to the ability to maintain one’s lifestyle without needing to work for an income. This means that an individual has accumulated enough assets, savings, or investments that generate income to cover all living expenses and necessities, allowing them to live life on their own terms without the constraints of needing a job to earn money. This status often provides individuals with the freedom to pursue passions, take risks, or simply enjoy life without the pressure of financial obligations tied to employment.

The other options do not capture the full essence of financial independence. Having just enough savings for emergencies implies financial vulnerability as it does not ensure a sustainable lifestyle. Relying on others for financial support inherently means one is dependent, which contradicts the concept of independence. While having a well-funded retirement account is a crucial element of financial security, it alone does not define financial independence, as it depends on how those funds are managed and whether they provide enough income to cover living expenses without additional work.