The Pursuit of Financial Independence
By K. Bridget Schneider, CFP®, CRPC®
I love a good firework display and Independence Day – the 4th of July – is usually the best opportunity to see one. It’s a great celebration of our nation’s declaration that the thirteen colonies regarded themselves as a new nation, the United States of America. It was about freedom from political tyranny. The ability to make our own decisions and set our own rules.
There are many ways we gain independence in our lives, from feeding and dressing ourselves to moving out of our parent’s home. I remember my excitement as a teenager in buying clothes and shoes that I selected and paid for with my own money. I certainly felt financially independent at that time, but there are many levels of financial independence. For some, it might be buying their own home or paying off their mortgage. But I think the ultimate financial independence comes when you have saved enough that you don’t need to rely on having income from a job to make ends meet. Some people call this retirement.
Unfortunately, many people retire without achieving financial independence. They simply decide that they have reached their targeted “retirement age” and they start drawing from whatever benefits or savings they have available. There is no plan. There is no consideration for how they will handle the surprises that come along or the effects of inflation on their benefits. As their retirement unfolds, they begin to feel the pinch as their income can’t cover everything.
But there are people who take the time to examine what financial independence means to them. They decide when they want to retire – early or late. They calculate what it will take to achieve that goal. Then they make decisions on how to save or invest, which includes how much they will spend today versus save for tomorrow. There isn’t one perfect answer, but the point is that they develop a goal and plans to achieve that goal rather than just hoping their retirement will somehow work out.
You may feel confident doing these calculations yourself, but many people enlist help to be sure they haven’t missed something or that they have all the facts. If you feel that way I suggest hiring a CERTIFIED FINANCIAL PLANNER™ professional to help in your journey to financial independence. They are a credentialed consultant who will take a holistic approach to looking at your entire financial picture, not just one or two aspects.
Retirement doesn’t have to be tied to an age. Instead it can be tied to reaching a savings level that will provide an income stream that allows you to live on your own terms. That is true financial independence. If you would like to receive more information, contact Connections Financial Advisors today and schedule a complimentary meeting.
I recently read an article stating divorce rates in the United States are declining – except for people over 50. There are many reasons this could be happening. Some may find that the longer they live, there are more opportunities to grow—and grow apart. Or they discover that as the kids grow up and move out, the glue that holds a marriage together disappears. Another thought is that with more women working and becoming financially independent, there may not be a financial need to stay together. But you should be aware that gray divorce – divorce after 50 – can be financially devastating without careful planning. To help out, here are 5 financial considerations of gray divorce.
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In the past, we have written blog posts on when you should start planning for retirement, how much money you will need in retirement, ways to gauge your saving for retirement, and creating a plan to manage your income in retirement. But have you ever taken the time to figure out, “What Are You Saving for in Retirement?”