Planning for retirement -- or financial independence -- is considerably more complicated than merely opening an IRA, contributing to a 401k, or belonging to a pension plan where you work. While these are excellent beginnings, you must also plan for any and all events that can happen after you achieve financial independence.
It is important to think about where you want to live, how much you wish to travel, how you will handle taxes, what your insurance needs will be, and other major financial questions. Also, consider how you want your assets to be distributed after your death. Each of these elements is part of a well-rounded plan.
The planning process should begin as early as possible in life, because the sooner a person starts, the more time there is to build an investment portfolio for retirement income. With some careful thought, however, the planning process can be started at any time in your work career. Whatever a person’s age, the secret is to put together a plan and follow it.
Start putting money aside that will generate income once you are no longer working. Set up strategies that will protect your assets and limit your tax liabilities when you achieve financial independence.
If you are married, plan your retirement with your spouse for your mutual benefit, taking into account both incomes if both of you work.
Once you achieve financial independence, you probably will require less income for living expenses; however, you could be spending much more for insurance premiums or health care. Also, your travel expenses may increase when you reach this milestone in your life.
Financial Innovations, LLC will assist you in calculating how much money you need to save, in what types of vehicles, to meet your goals, including keeping up with inflation and achieving appreciation of assets. Depending on the age of the client, we sometimes include Social Security payments in these calculations.