In a recent study in the United States of a 100 people, tracking them on their chosen financial journey from when they were aged 25 to when the became aged 65,it showed that amongst those surveyed, only 1 out of 100 was financially free at age 65, 5 out of 100 financially independent, the rest were either dead, dependent or still looking for other jobs when they should be retired and resting. The key to an early and comfortable retirement is planning, get a Retirement map.
Step 1: Set Your Retirement Age
Most people wait till five years to compulsory retirement or exit from their job before planning for their retirement. This could prove be a fatal error, until you get your map and read it correctly, the journey of life at best is uncertain, with a Retirement Map, you can navigate with clarity and certainty. You can set your goal (Retirement Age), this is often age 65, but why can’t it be a lot earlier, if the whole essence of planning for it is to allow you make your choice, I personally will be retiring very early. Build enough Assets with matching passive income, then retirement will happen by default!.
Step 2: Set Retirement Living Expense
Collect and analyze spending, saving, and investment information. Taking into cognizance your spending and living expense today, make assumptions and projection about your spending after retirement based on the lifestyle envisage & will like. You will need to make adjustments for taxation and inflation as well, you may not have a perfect result, remember, it is a guide. Look at your current savings rate and your investments. This will also help you in choice of investments, as you must invest in opportunities that can outpace inflation and deliver stable returns.
Step 3: Get Expert Advice
Expert advice can help you compare your assumptions with standard practice. If you have a Financial Mentor, this is the best place to engage him or her, you will be setting up yourself for a bright future if you can harmonize all their input to set up your Retirement map. Your goal should be simple…FINANCIAL FREEDOM.
Step 4: Execute The Plan
Once you complete your map by setting the minimum ROI (Return On Investment) to achieve your desired goal, you need to capture the Asset targets with particular emphasis on cash flow as against capital appreciation. You will then come up with the annual, monthly, weekly and where possible daily action points/investment action to achieve the target. Execute the retirement plan with your spending, savings, and investments projections so you can work toward the goal of being financially independent (retiring) at set age. You will also need to set your review timelines as Retirement map is not a static document, you will need to adjust to realities as you move on, but clarity and discipline will keep you focused on the goal.
Step 5: Get Accountable
One of my Mentors will always say “Wealth is discipline”, be sure that though you have a plan in place, it will not immediately translate to desired result. You will need to work hard to achieve your set goals. A tested method is to make yourself accountable to someone that you regard as an authority figure or a mentor. There will be unplanned events, major challenges and emergencies, be sure to keep everything in their correct perspectives.
Life always has a way of rewarding the visionaries, developing a Retirement map shows that you are one, remember only 1 out of 65 will likely be financially free at age 65, your goal is to be in that one percent.
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