Declaring Your Financial Independence
The Fourth of July marks a celebration of the birth of this great nation– built on a foundation of individual liberty and freedom. Yet many are surprised to learn that the Continental Congress actually voted for independence on July 2nd 1776, rather than on the fourth.
Why the disparity?
It is because our founders knew that simply declaring your freedom didn’t mean much without some careful planning to lay out the details. They spent those two days defining what independence would look like and how to move forward. That plan was refined, and the Declaration of Independence was ratified on July 4th.
It is worth noting that we don’t celebrate the anniversary of declaring our independence, but rather the implementation of the plan. It’s a lesson worth applying for each of us today in regard to a different kind of independence– our financial independence.
Today simply thinking of retirement as the day you stop working is an outdated notion. People are living longer and with better health. This makes how you spend those days matter more than ever. In short, you need a longer-term approach.
A few tips can help you get started.
1) Hack your Happiness
Scientific research indicates that having a purpose in retirement leads to a healthier, longer life, and can even stave off mental decline1. So what is your purpose and how can you live it out in retirement?
It might help to compile a list of the times in your life when you were the most satisfied, both at work and personally. List the projects, tasks, events and circumstances surrounding these.
Armed with this, spend some time thinking about each and see if you can define some commonalities. You likely already know what you love, but understanding how those passions manifested themselves in tasks and projects is important. It will help you find and recognize opportunities to repeat them in the future.
2) Focus on Relationships
As important as what you spend your time on is who you spend it with. Studies found an active social life to be an additional commonality among thriving retirees, even driving positive physical outcomes2.
The issue for many is that leaving the working world can disconnect them from many of the relationships they now need. Because of this, it is incumbent upon retirees to be intentional in fostering existing and new connections.
Many find the gap can be filled with social groups, non-profit work or as mentors for the next generation. Organizations like SCORE (www.score.org) can help aspiring mentors find opportunities to share a lifetime of experience with the next generation and help build both friendships and purpose.
3) Align your Finances
Once you’ve mapped out what your retirement might look like, it is time to align your finances in support of those goals. Experts typically say that retirees should look to replace 80% of their pre-retirement income. This is a good benchmark, but will be greatly impacted by lifestyle factors, healthcare costs, retirement income strategies and many others.
A comprehensive goals-based look at your projected income and expenses in retirement is crucial to modeling a directionally accurate retirement calculation. This begins with your goals and ends with guidance and a roadmap. A meeting with a financial advisor who specializes in retirement can help.
Freedom and liberty are tremendously empowering notions that we rightly celebrate this time of year. Your retirement can be similarly empowering. By taking the time now to carefully prepare, you can ensure you make the most of your financial independence.
At Weisenberger & Evenson we specialize in every phase of retirement from accumulation through distribution. No matter where you are on your journey, building a roadmap forward begins with a simple conversation. Contact us to get started.
Doug and Josh are registered representatives and investment advisor representatives of CRI Securities, LLC and Securian Financial Services, Inc. 1530829/06-2016