March 11, 2010
These days people tend to work longer, and they often do something else after they leave the job that they did for years. That is why the term "financial independence" may be more appropriate than "retirement". Achieving financial independence means that you don't have to work at your regular job any longer because you have the financial resources to either stop working entirely or to work part-time doing something that you enjoy.
The key is, have you planned for achieving financial independence with a competent advisor and do you know when it is going to occur?
In the absence of planning there are certain alternatives to consider. They include lowering your standard of living in retirement, and getting by on less money. This may or may not be palatable. Another is that you may have to increase your rate of potential return on your investments, which may or may not be prudent depending upon your tolerance for risk. Another consideration might be working longer.
Comprehensive financial planning, done in advance and utilizing economic modeling, can help you quantify your particular situation, look at alternatives and make an informed decision. You may find, for instance, that you need to increase your 401K contribution in order to achieve your goals. Most people would rather know ahead of time what changes they can make to meet their long term goals, versus coming to a decision point and facing some options that they do not like. It is never too early to start planning for your "financial independence".
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).