Perspective Matters
Hey there! This month I'm super excited to talk about something I really care about: setting yourself up for financial freedom. You might be thinking, "Oh great, another retirement blog." But wait a minute - we're going to spice things up!
HOW ABOUT THINKING OF RETIRMENT AS BEING FINACIALLY FREE INSTEAD?
When we think about retirement, we usually picture suddenly going from working all the time to just chilling out. But that might not be what most people actually want or can do these days. It's better to think about preparing for financial independence, where you get to choose whether you want to work or not, rather than feeling like you have to.
CRACKING THE CODE OF FINANCIAL FREEDOM
To gain a better insight into the factors that influence our journey towards financial independence, let's check out this insightful chart created by JP Morgan Asset Management:
This chart breaks down the parts of retirement planning depending on how much control we have over them:
Out of Our Hands: Things like government rules and market ups and downs are in this group.
Kind of Control: We can kind of steer stuff like how long we work, how much we earn, and even a bit of our lifespan through what we choose to do.
Total Control: This is where we can really make a big difference. We call the shots on:
Deciding whether to save or spend
Where we put our money in different accounts and investments
Knowing you need enough money to cover your basics before you can start saving is super important. Right now, lots of Americans are facing challenges because of the economy. But things seem to be looking up! If history is an any indication, we can expect more job opportunities and better options in the housing market soon.
THE IMPORTANT BALANCE BETWEEN SAVING AND SPENDING
Let me explain: Increasing your savings requires reducing current expenses. It's all about making choices. As your approachable financial advisor, I'm not here to criticize your coffee indulgence or suggest you live on noodles for the next ten years. My role is to help you grasp the consequences of your decisions and find solutions for where you wish to make adjustments.
Keep in mind, we are naturally inclined towards immediate rewards. This isn't a personal flaw – it's how our brains work! Society encourages us to spend in the present. Therefore, let's use our intelligence to overcome our primal instincts and prepare for long-term achievements.
CHECK OUT THE NUMBERS
This chart that gives you some great info on how your income can be replaced during retirement!
See how Social Security only covers a portion of your income? The more you earn (and spend), the more you'll need to save to maintain your lifestyle. For example, if you're making $100k a year, you'll need to replace about 42% of that in retirement. That's why building your own nest egg is crucial!
HOW ARE YOU DOING?
If you're curious about how close you are to financial independence, check out these two charts!
The Retirement Savings Checkpoint:
This is like a roadmap to see how much you need to save now, considering your age and income, so you can be financially free by the time you turn 65.
Catch-Up Savings Rate:
If you're just getting started, this chart breaks down how much of your money you should save now to be financially independent by 65. No need to stress if you're behind – knowing where you stand is the first step to getting better!
GET THE MOST OUT OF YOUR SAVINGS PLAN
Once you've got your emergency fund set up, here's a suggestion for how to use your savings:
One important tip is to make sure you focus on putting money into your work retirement account first, especially to get as much matching money from your employer as possible. This way, you're basically getting some "free money" that helps you reach financial independence faster.
GET FINANCIAL HELP WITH YOUR MONEY JOURNEY
So, this info gives you a good starting point, but let's be real, financial planning can get pretty tricky. That's where a Certified Financial Planner® professional comes in handy. They can give you tailored advice to make sense of all this data based on your specific goals and circumstances.
YOU'VE GOT THIS
There are a lot of things that can impact our financial future that we can't really control. But guess what? We do have a say in how things turn out by focusing on what we can control: our saving habits and where we put our money. By being proactive in these areas, you're setting yourself up for the best shot at reaching financial independence.
We're all about seeing this as an ongoing journey of making smart choices and planning ahead. With the right mindset and some support, you can start building a financially secure and liberating future.
Are you ready to tackle your financial independence as a team?
Neither Prism Planning and Solutions Group nor Insight Advisors provide tax advice, and nothing in this communication should be treated as such. This communication should not be interpreted as a recommendation for a specific investment or tax-
planning strategy. We are providing this material for informational purposes only. We have made every attempt to verify that information contained in this communication is accurate as of the date published but make no warranties. Before making any decisions related to your own tax and/or investment situation you should consult the appropriate professionals.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Comments