Retirement is a concept that continues to experience transitions. Becoming financially independent is difficult, but it is also possible. Historically, only 5% of people are able to retire and maintain financial independence. Most have never created a financial plan. A plan is critical for achieving your financial goals.
“Nothing splendid has ever been achieved except by those who dared believe that something inside them was superior to circumstance.”
– Bruce Barton
First, what is financial independence?
Based on recent surreys it means you have no debt, you have saved enough to meet your needs, and have on-going income to fund the rest of your life. Getting to this point is different for each person. Here’s three basic concepts to apply:
1. Save up to 20% of your gross income into a tax qualified plan.
Each dollar saved into your retirement account automatically gives you
a 25-30% return, just from savings in the taxes. Any positive return on your
portfolio creates a significant compounded total return. If you can’t do 20%,
start at 10% and increase it each year until you get to 20%.
2. Give away at least 10% of your income to your church or a non-profit agency.
Learning to live a generous life style has many positive. Giving is a personal
matter determined in your heart. Giving requires resolve. It needs to be planed
and deliberate. It should be done privately, not publicly. Giving helps everyone.
Matthew 10:8 says, “You have been treated generously, so live generously.”
3. Live on whatever is left over.
Crazy? Not at all. Think about it. If you are spending 100% of your income
today, how will you replace it when you no longer have the ability to produce
income? Let’s assume that your have your home mortgage paid before you retire.
Inflation never retires. your expenses will actually increase. Many fear the rising
costs of healthcare. You have to have a plan.
1. Pay off all debt, including your mortgage.
2. Set up a plan that will provide you income for retirement.
3. Keep your living expenses as low as possible and look for additional ways to save.
4. Follow the basics. Save 20% of your income, give away 10%, and live on
whatever is left over.
5. Develop a sound investment strategy that will work for the long term. Don’t
allow fear and uncertainty to move you from your objectives.
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