Celebrate Independence Day with a Financial Confidence Quiz
There’s nothing quite like the celebration of independence by Americans every 4th of July.
Before darkness arrives and the fireworks start, take a moment to really think about what it is that we’re celebrating because it’s something that did not exist before our founding fathers created it.
We’re celebrating our independence, our right to exercise our own judgment and use our reasoning capacity to choose and act on what we believe to be best for our own well-being (as long as we don’t use force or fraud to deny anyone else the right to pursue the same for themselves).
This basic and profound right was not identified or protected prior to the creation of The United States, yet many Americans are either unaware of how extraordinary this right is, or they take it completely for granted.
Never before in history was there a government created for the sole purpose of protecting and defending individual rights against force or fraud, even from government. Instead, individuals were subservient to some form of a dictatorship or governing entity empowered with the right to control your life.
Think about how incredibly fortunate we are to have this right, and the life it allows you to live if you choose.
Are You Confident Enough To Take Advantage?
Now the question is, “are you confident enough to take full advantage of this independence?”
That’s a loaded question, so let’s narrow it down a little. Grade yourself on a scale of 1 to 10 on your level of confidence in your ability to do:
- What you want
- When you want
- Where you want
- With whomever you choose
Where do you stack up? Are you a 10 across the board?
If not, you’re not alone. Most would acknowledge that they’re not as close as they would like, even those who are retired, and the reason is not a lack of possibility.
A big challenge I’ve witnessed over the last 37 years helping well-deserving individuals and couples navigate their complex retirement transition is that most are simply not financially confident enough at this critical point in their lives, and that lack of confidence can translate into a lack of independence.
There’s a direct link between the two. It’s very hard to experience high levels of one without the other.
If you stop and think about it, all those years of diligently saving money and building your retirement portfolio for the future are of very little value to you now unless you have the confidence to spend and enjoy it so you can experience the Ideal Future you’ve earned.
Questions You Need to Answer Before You Retire
Planning for retirement can be daunting. Our Retirement Guidebook is here to help you get started.
Where to Derive Confidence
Confidence comes from increased levels of certainty, i.e. less ambiguity or haziness, so my first recommendation is to brainstorm and clarify what is testing your confidence.
Question precisely what makes you feel uncertain and quantify what it means to you personally.
For you, one formula for increased financial confidence is knowing your numbers, i.e.:
- How much does it cost you to live your desired lifestyle?
- How much will you need to withdraw from your retirement portfolio each year once your paycheck from work ends?
- What investment rate of return do you need to earn (above inflation) to keep your retirement portfolio intact for the rest of your life?
Invest the time to get accurate and detailed answers to these questions. Generic “rules of thumb” touted in a magazine, or someone’s opinion, will not bring about the necessary confidence you need to flip the switch from saving what you’ve earned to spending what you’ve saved.
For example, there’s no power in knowing what “the market” did today, or this month, or this year. Or, in someone’s prediction about how markets will react to today’s news. All of that can fall under the category of “noise.”
The power is in knowing how your retirement portfolio is performing in relation to your long-term financial independence goals.
Are you on track? Are you properly positioned to increase your odds of outpacing inflation and protecting your purchasing power so you can maintain your desired lifestyle when your paycheck from work ends?
Knowing your numbers can allow you to make accurate, calm decisions, separating fact from fiction, and fact from opinion.
In contrast to those who react emotionally and have little confidence, it can allow your actions to be solidly based on the evidence instead of your own or someone else’s opinions.
That’s where your confidence can come from and, in turn, your increased level of independence.
Now, that’s something to celebrate!
Jack Phelps
Managing Partner / Financial Advisor