Independence and Your Financial Confidence
There’s nothing quite like the celebration of independence by Americans every 4th of July.
Before darkness falls and the fireworks start, take a moment to really think about what 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 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, and certainly not 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.
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?
If not, you’re not alone.
The big challenge I’ve witnessed over the last 35 years of coaching well-deserving individuals and couples through their 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 think about it, all those years of diligently saving money and building your retirement portfolio for the future are of 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 a high degree of certainty, from “knowing.” Whenever my confidence gets tested in any area of my life, I immediately go into “information acquisition and quantification mode.”
What does that mean? Well, I don’t like ambiguity or haziness, so as quickly as I can, I intently study whatever is making me uncertain and quantify what it means to me personally.
For you, one formula for financial confidence is knowing your numbers, i.e.:
- How much does it cost 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 real investment rate of return do you need to keep your retirement portfolio full 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, this month, or this year, or in someone’s prediction about how markets will react to today’s news.
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, knowing your numbers 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 and, in turn, your increased level of independence can come from.
Now, that’s something to celebrate!
Jack Phelps
Financial Advisor / Managing Director