Even those of us with interesting and fulfilling jobs are guilty of daydreaming about a time when we can finally wake up on a Monday morning and know that the day ahead is ours, unrestricted by the daily grind. You might think about the hobbies you’ll take up or the extra time you’ll be able to spend with your family. Whether you’re planning the holiday of your dreams or just to spend more time with your grandchildren, it’s a good idea to plan and think about how much your life in the future is going to cost.
A quick Google search for early retirement reveals the growing trend of FIRE – ‘financial independence, retire early’. According to Forbes, there’s an increasing number of people aiming to achieve complete financial independence at a much younger age than 65 – over 10–15 years of a career rather than the traditional 40. As independent finance blogger JD Roth puts it, ‘financial independence occurs when you’ve saved enough to support your current spending habits for the rest of your life without the need to earn more money. You might choose to work for other reasons – such as passion or purpose – but you no longer need a job to fund
‘As a Chartered Financial Planner I have these types of conversations with my clients every day,’ says Amanda Cowie, Director at Robson Laidler Wealth. ‘To be honest, there is nothing more worthwhile in my role than helping people have some control over the choice of whether to work or not.
‘We use the term “Financial Independence Day” rather than “retirement” as (to us) it means a choice. Most of our clients would like to know when they can afford to stop work altogether, but many will phase into it. To have these kinds of choices you need a robust financial plan.’
It may seem like there’s a lot to consider, and it can seem overwhelming or like an unrealistic goal, but with the help of a good financial planner, you can make your dream of financial independence before retirement a reality. Robson Laidler Wealth have provided us with their checklist of things you should be considering and discussing with your financial planner before going ahead.
• It’s never too early to begin thinking about “Financial Independence Day” – ideally when would you like this to be? If you are married or in a longterm relationship, it is probably a good idea to think about this together.
• What does a great plan for your future look like? What’s on your bucket list?
• Imagine it’s a Thursday morning in November, six months after you’ve stopped working – describe what your day ahead looks like?
• What do you spend now? Is this likely to change when you stop work?
• When your salary is reduced or cut off, where will you get your income to cover your spending plans?
• How important is it for you to have certainty of income versus flexibility of income?
• Do you know how much your State Pension is and when it will be paid?
‘The job of a good financial planner is to get you thinking ahead about what you want the future to look like,’ explains Amanda. ‘They will work with you to put an action plan in place to increase the probability of you achieving your goals.’