Life After Full-time Work Blog

Here’s an explanation of your “Personal Funded Ratio” and how using this simple but powerful concept in different ways gives you insights into the affordability of your financial goals 

Your “Personal Funded Ratio” is a comparison of how much you have, with how much you need, for any goal, but usually applied to retirement. As simple as that. I described the notion in Blog Post #46, and mentioned how I originally came up with it. Since then, Tim Noonan and Matt Smith (friends and Russell Investments colleagues) did a better job in their book Someday Rich, and now it is used extensively by Russ Hill and his colleagues at Halbert Hargrove as well as Wade Pfau and his colleagues at Retirement Researcher.

The reason I bring it up now is that, at a recent meeting of the International Center for Wealth Advisory Excellence, I was asked to give a presentation on it, and it seemed to be well received. In fact, Bart “BD” Dalton (of Temple Row Wealth Management) wrote it up on LinkedIn – and I think he explained it more clearly and simply and briefly than I did (with a lot of kindness toward me). So I asked BD if I could use his piece for this blog post, and he said OK.

Here it is.

In the next blog post, I’ll take it further. But for now, enjoy BD’s writing.

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When Demi-Gods Simplify the Complex: My Cortona Moment with Don and the Personal Funded Ratio

Picture this: You’re sitting in a sun-drenched piazza in Cortona, Italy, the kind of place where time seems to slow down and profound conversations unfold naturally. Across from you sits someone who has just shattered everything you thought you knew about retirement planning with one elegantly simple concept.

That’s exactly what happened when I met Don Ezra—the father of the Personal Funded Ratio (PFR). In that magical Tuscan setting, I encountered what I can only describe as a demi-god of financial strategy. Not the intimidating, academic type who drowns you in jargon, but someone with the rare gift of transforming complex mathematical wizardry into something beautifully simple.

The Magic Question: How Soon Can I Get to My Next Stage of Life?

Here’s the breakthrough that stopped me cold: Your Personal Funded Ratio is simply comparing how much you’ve got with how much you need. That’s it. No complex algorithms, no 47-page spreadsheets, no financial advisor speaking in tongues.

Don took the most sophisticated concept from institutional pension management—the funded ratio that every pension trustee obsesses over—and made it personal. When a pension fund hits 100% funded, they’re golden. When Don’s Personal Funded Ratio calculation shows you’re at 100% or higher, you’re ready for your next stage of life.

The Four Dials That Control Your Destiny

This is where the genius becomes actionable. Don showed me there are exactly four “dials” you can turn to improve your funded ratio:

• Save more (obvious but effective)
• Retire later (buy yourself more time)
• Lower your lifestyle ambitions (get real about what you actually need)
• Take more investment risk (potentially bridge the gap with higher returns)

What hit me like lightning in that Italian afternoon was the simplicity. No more guessing. No more “I hope I have enough.” Just math that tells you exactly where you stand.

Two Numbers That Change Everything

Don’s approach gives you two critical perspectives:

Liquid Assets PFR: Can you fund your desired lifestyle with just your easily accessible money? This is your “sleep well at night” number.

Total Assets PFR: What if you include everything—your home, illiquid investments, the works? This shows your true financial position.

When your liquid assets exceed 100% of your needs, you’re financially free without touching your house. When your total assets hit that mark, you know you can make it work by liquidating everything if needed.

The “Must Have” vs. “Nice to Have” Game-Changer

Here’s where Don’s thinking becomes pure gold for dealmakers like us. He suggests dividing your budget into essentials (“must have”) and discretionary spending (“nice to have”).

This isn’t about what financial planners think you need—it’s about what YOU can’t imagine living without. Your evaluation is the only one that counts.

Run your PFR on both scenarios. Maybe you’re 120% funded for essentials but only 80% funded for your full lifestyle. That’s incredibly valuable intelligence for making your next move.

Why This Matters for Your Next Chapter

In Cortona, watching Don explain this concept with the passion of someone who’d unlocked a universal truth, I realized something profound: Most people have absolutely no clue whether they’re at 50%, 100%, or 150% funded for their next life stage.

That’s like running a business without knowing if you’re profitable.

Don’s Personal Funded Ratio doesn’t just tell you when you can retire—it tells you when you can make any major life transition. Want to start that consulting practice? Launch that passion project? Move to Italy? Your PFR gives you the mathematical confidence to pull the trigger.

The Bottom Line

Sometimes you meet someone who’s clearly operating on a different intellectual level—someone who can take the most complex financial engineering and distill it into something so simple a child could understand it. That’s the mark of true genius.

Don Ezra didn’t just create a calculation; he created clarity. And in our uncertain world, clarity about your financial future might be the most valuable commodity of all.

Your move: Calculate your Personal Funded Ratio this week. Find out if you’re closer to 50%, 100%, or 150% funded for your next stage of life. Because until you know where you stand, you can’t plan where you’re going.

Ready to run your numbers? Don’s calculator is available at donezra.com—the same tool that opened my eyes in that memorable Cortona conversation.

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Thank you, BD.

I must say, when people you greatly admire really like an idea, it’s very satisfying!

Oh, one more thing. In Blog Post #236 I carelessly omitted the words “of truth” in the definition of the fiduciary standard. I have since corrected it. So it now reads:

“A Fiduciary standard of obligation is required for all institutions (corporate, non-profit, and governmental), to place the interests of all stakeholders, of truth, of humanity, democracy, and the living planet that sustains us, first above their own self-interest.”

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Takeaway

Common sense: if your PFR exceeds 100%, you have enough; if not, you need to do something. But knowing your PFR is the essential starting place.

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