When you hear the phrase financial independence, what comes to mind? When you hear the word retirement do the same images come to mind?
This isn’t your grandfather’s financial independence
The word retirement conjures up thoughts and emotions. Many of those thoughts and emotions are negative. Doing nothing. Having no purpose. Death.
Retirement for many is something defined by Social Security eligibility. If you are fortunate to have a pension, you may define it by the date you receive full pension benefits. My father defined retirement by his pension date. Have you thought about these questions?
- What does financial independence mean to you?
- What do you want to provide for your children and grandchildren’s education?
- What do you want your legacy to be?
Armed with answers to questions such as these you can start the planning process to turn your retirement into financial independence.
Turning retirement into financial independence
How much annual income would you need to feel comfortable in no longer work? Have you actually stopped to think about that question? Quick, write your answer down. I strongly believe that one needs to determine how much money they need to feel like they’re living independently. That number needs to get adjusted for inflation on an annual basis. I recommend working with a CERTIFIED FINANCIAL PLANNER™ professional or CHARTERED RETIREMENT PLANNING COUNSELOR™ to help you determine how to pursue your income goal. The keys that they will help you with can be thought of as SAT.
- Save. How much to save?
- Asset allocation. What risk adjusted return do you need to target?
- Time. How long do you need to save?
Financial independence on your own terms
Let’s say that you want to retire at age 52. If that is 10 years from now, how much would you need to save and what target rate of return would you need? Based on your own comfort level with asset allocation and the ups and downs of the market you may want to save more or delay retiring for a couple of years? Keep in mind that you should inflation adjust this number on an annual basis.
Are you on track to financial independence?
Envision Wealth Planning is focused on helping people avoid a crisis retirement. Much of the problem has to do with not receiving any formal education in financial literacy. We not only help educate through our free resources but also provide one-on-one advice. We provide a personal website to help you keep all of your information organized. Our designation as CERTIFIED FINANCIAL PLANNER™ professional along with our advanced tools help us to address planning for your financial independence.
We encourage you take advantage of our free consultation to see how are you need process can help you determine if there are gaps your savings, allocation and time necessary to reach your goals. What do you envision?™
(1) The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
(2) This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.