A financial planner's Independence Day

Achieving Financial Independence

We spend our lives talking about retirement. It is viewed by many as a euphoric time and because of that, we spend the years approaching retirement continuously wondering how much cash we will need and indeed whether we can afford to retire. However, without financial independence, retirement may not be possible.

The idea of financial independence is rarely considered but arguably, it should be the single most important financial objective for people. In our experience though,  it is likely to be unarticulated and undefined. Having a good grasp of the concept and the key factors involved is important for the financial wellbeing of you and your family. 

Financial independence occurs when you have accumulated sufficient funds to support your lifestyle for the rest of your life. If you continue to work, you do so because you want to, rather than because you have to.

It matters because you know what you are targeting; you know when you can afford to stop earning (or indeed, when you can’t afford to); and making future financial decisions becomes a lot easier with a clearly defined objective in mind.

Whilst defining what we mean by financial independence is straightforward enough, what’s not so easy to understand is what the right level of capital is: what’s your number?

To get to this magic number you will need to have a solid idea of what your future lifestyle looks like. If money were no object, how would you wish to live your life? We then need to translate your ideal future lifestyle into a cost to make that lifestyle a reality.

With a strawman of what the future looks like, and desired timescales, plus a level of assumptions, we can calculate the magic number. And with a target, we can create a strategy to get there. What return do you need on your investment, how much can you save, and what’s the most efficient way of investing? How do we minimise the taxman’s share? Another (unwelcome) consideration is that life can bring unexpected challenges. Protecting your family against the impact of ill health, or premature death are crucial elements of any plan.

If you would like to talk about achieving financial independence, please do get in touch. We will send you a series of short articles all focused on the elements you need to consider before you can achieve financial independence.

Is it time you got a plan?

#financialindependence #financialpeaceofmind #financialplanning #wealthmanagement #independenceday