Retirement planning and financial independence

The whole essence of being in charge of your finances is about getting your life back and living life on your own terms. Everything thing comes to an end sometime, including your job. That means you will be laid off some time, guaranteed. By the time you clock 60 (or 65 in some instances – higher for judges), you will be let go. Attaining financial independence then will not be nice to have, but mandatory.

Since attaining financial independence is mandatory, if you are going to have to attain financial independence someday, why leave it till when you retire? Most people think about retirement planning without actively seeking financial independence. They plan for that day in the future, and since it is in the future, there is this feeling at the back of their mind that they still have time, especially if they are young. But it is highly recommended to start it planning your future as soon as possible.

Financial independence simply means being able to maintain your desired standard of living without having to ever work again. Sounds like retirement, doesn’t it? The difference is, why not achieve it now rather than later? On what are you basing your retirement plans on, the actions of others? You hope they know what they are doing with your money, and what if you find out too late that they don’t? Will you have time to do it over?

Achieving financial independence now gives you more options. Achieving financial independence does not mean quitting your job. Financial independence gives you the freedom to choose. It gives you the option of choosing the job you really love, rather than enduring a job you hate hoping for the day you will turn 60 and be finally free. Why not be free to choose today? Why wait to be free to do what you really want when you turn 60? Secondly, it allows you the freedom to choose to retire early if you so desire, the keyword being choice. You may not be cut out to be an employee deep down, but you are doing it because of financial security for your family. What if putting food on the table and paying bills is no longer an issue?

In the event of permanent incapacitation before one is qualified for a pension (or built up a nest egg to an appreciable level), one can still live a life beyond the limitations of disability benefits one may be entitled to. When you achieve financial independence, you don’t need to wait for anyone or be at the mercy of anyone. You have enough resources to take care of yourself beyond retirement, hence achieving financial independence is much better than just retirement planning. Having financial independence means you can sleep at night knowing the future of your loved ones is safe and secure.

Waiting for retirement and pensions is an industrial-age idea. Decades back, the company (and government) surely took care of you till death. There were pensions and benefits. Most pensions are now contributory, and your money is there depending on what your pension managers did with it. If there is a major market crash and your pension portfolio is exposed, you may wake up to the reality that your nest egg is depleted even before the first drawdown. You need to have the option, to ask yourself what if?

Achieving financial independence is having the best of both worlds- you can afford not to work again even before you turn 60, and if you really hate your job, you can go do something else with your life.