4 Tips for Achieving (and Preserving) Financial Independence

Financial independence. We all want it. It’s #goals.

But, as Antoine de Saint-Exupéry said, “A goal without a plan is just a wish.” With that in mind, do you have a goal? Or do you have a wish?

Whether you want to enjoy your golden years without worry, or you want to retire early, financial independence is attainable. Just keep this axiom in mind – if you can plan it, you can achieve it. 

Of course, in the world of finances, there are no guarantees. But there are opportunities for every one of us to become financially self-sufficient – if we follow the right steps. 

With that in mind, here are 4 suggestions to help you plan your path to financial independence. 

1. Plan ahead.

We all know the fable of the ant and the grasshopper. One prepares for his future, while the other fritters away his prime years. We’re not saying you shouldn’t enjoy life, but you must make the most of your saving and investing years. That means spending less than you make, no matter how much you make. And it’s absolutely crucial that you invest, and invest prudently. Take your emotions out of the equation.

Don’t automate your approach. Rather, take the time to create a plan with a financial advisor and delve into the math behind how your savings amount translates to your expected portfolio value. You need roughly 10 times your annual income in savings by the age of 67 to retire comfortably. 

Are you prepared for this? Invest in planning and understanding, and you will be.

2. Believe you can achieve!

You’ve imagined the day a thousand times. You’ve clocked out for the last time, the confetti from your retirement party peppers the floor. You’re finally free!

But are you? The day you retire not only marks a major change in your life, but also a huge shift in your financial situation – you are no longer investing money for your retirement. You are now drawing on it. It can be a big leap of faith that your money will outlive you. But to the well prepared, faith has little to do with it. You have to strategize and plan for that glorious day – but you don’t have to do it alone. 

With the help of a financial planner, you can learn how much your portfolio can afford to pay you, no matter what the market does. That will be your income. Ensure your future self’s comfort in retirement by overestimating your needs as you plan.

3. Protect your wealth.

So, you’ve planned it all out, you’ve invested responsibly, and now you’ve got a nice nest egg to retire on. That’s it, right?

Wrong. On the day you retire, you have entered into a totally new phase of money management – preservation. And this phase takes a very different skill set than the one you used to get you there. A major mistake people make is assuming that preservation equals buying more bonds. There’s a lot more to it than that.

Many educated, smart people grow their wealth, then lose it multiple times throughout their lives. Why? Because they don’t know how to hold on to it. And once you stop working, you don’t have as much flexibility to make and recover from financial mistakes. Earning through work becomes harder as you age, and there isn’t a lot of wiggle room on a fixed income. So, bad decisions at this stage of life can spell trouble. 

The key to thriving on a fixed income and making your money outlast you is preservation. Preservation of wealth requires a mindset shift, patience and discipline, but also the practices of diversification, lowering risk tolerance, asset allocation and rebalancing. What grade would you give your own knowledge of these practices? Chances are a professional advisor knows more!

4. Stay the course.

As the world endured the pandemic and all the uncertainty that came with it, how did your portfolios hold up? Did they withstand the tremendous declines we saw in global stock markets? If you’re already retired, were your portfolios strong enough to support your income at the same level as before the COVID recession?

If you answered yes, you can thank your younger self’s foresight in planning ahead and anticipating the unexpected. And you can thank your present self for staying the course. Don’t let short-term market events spook you into abandoning your long-term plans. You can’t afford it.

Trust your plan, the science you used to create it, and the financial advisor who guided you along the way. Stay true – if you plan, persevere and preserve, financial independence and the peace of mind that comes with it are well within your grasp. 

for retirement, and might even give you a couple ideas about how you could expedite the process! 

If you’re wondering whether you’re on the right track for financial independence, you’ve come to the right place. Our goal is to help Austin-based families, business owners, and individuals make their financial dreams come true. And we have the plan to make it happen. Reach out to us at info@nestfinancial.net. Gloria and Sean are ready to help you create your personalized, comprehensive financial plan. 

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DISCLAIMER: We are legally obligated to remind you that the information and opinions shared in this article are for educational purposes only and are not financial planning or investment advice. For guidance about your unique goals, drop us a line at info@nestfinancial.net.