By Suzanne Hazlett
How would you define financial independence in retirement? Would the ability to make earning income an option define your notion of autonomy, or do you aspire for unlimited funds for unrestrained lifestyle spending? Financial independence will have a different meaning for everyone.
Here are some thoughts and considerations to help you figure out where you are on your path to financial independence.
Get the big picture. How do you envision your retirement? On what types of experiences or things do you want to spend your money?
Create a budget. If you plan to travel extensively, for your first 10 years of retirement, you may need the same annual income you had during your peak earning years.
Tally your guaranteed retirement income. The most common source is from Social Security. You can open an online “My Social Security” account to access your benefits information by visiting ssa.gov. Other income sources with varying levels of certainty are pension plans and annuity income streams.
Begin mapping out your plan for life after work by using noncommercial tools like worksheets available through aarp.org/retirement. Worksheet templates can bring to your attention essential questions you may not have considered.
Assess your credit and debt. Do you want to be debt-free before you retire? If so, have you mapped out how much debt you need to retire annually?
How much are you earning today? Have you explored other opportunities to increase your income before you retire?
How much are you spending now, and on what? If you were to redirect some of your current spending toward investing and saving, would you miss those expenditures today if you knew you were moving closer to your dreams?
If you are within three to five years from retirement, are you closely monitoring your variable investments and beginning to align them with your future life transition? As we have more birthdays, we tend to view our investments less as growth assets and more as sources of total return and income. Different investment tools or strategies may be appropriate to consider.
Having a plan will enhance the choices available to you along the way. Award-winning and acclaimed choreographer Twyla Tharp said, “The life we choose will pay dividends. The life we let choose us will bankrupt us.”
Suzanne Hazlett, MBA, CIMA®, CFP®, is a Certified Investment Management Analyst® and CERTIFIED FINANCIAL PLANNERTM. HAZLETT WEALTH MANAGEMENT, LLC is independent of Raymond James and is not a registered broker/dealer. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. 675 Sun Valley Road Ketchum, Idaho, 208.726.0605. HazlettWealthManagement.com
