What Does Financial Freedom Mean to You?
Blaine Johnson, LUTCF®, CLTC®
What is it that motivates you to work so hard? Is it just to pay the bills, do some fun things, put a bit aside for the future, and call it a day? Most of us just want to have “enough.” Enough to do what we want, live where we want, and work only as much as we want to. But what is your “enough”? What does financial freedom look like to you?
What Is Financial Freedom?
The term “financial freedom” has such a nice ring to it. It evokes images of security, independence, leisure, and opportunity. Financial freedom is defined as having sufficient personal resources to live without needing to work to cover the basics. It means you have the time and resources to pursue fulfillment in your life. If you have financial freedom, you can focus on living your life rather than making a living.
The sobering truth is that most of us are in the dark when it comes to understanding our financial freedom number. We don’t know the amount that we need to live the life we want to. And if we don’t have this number in mind, we are shooting at a target blindfolded. We can’t effectively plan or strategize because we don’t know what we are aiming for.
In a recent Retirement Confidence Survey, the findings state that only 21 percent of workers are very confident about having enough money for a comfortable retirement. Globally, HSBC reports that retirement is not the primary savings priority for 85% of working age people and that 29% of retirees who did not prepare adequately for a comfortable retirement were not aware of how much they needed to save.
Why have so few of us taken the time to calculate our financial freedom number? Are we just unaware of the consequences? Are we too busy with our daily responsibilities? Or do we fear that our number will be out of our reach and want to avoid the discouragement that may come?
The exciting reality is that your financial freedom may be closer than you think! But without working to define your personal freedom number, it’s impossible to make progress towards it. We encourage you to take a few minutes today to calculate your financial freedom number.
What Is Your Financial Freedom Number?
There’s no need to overcomplicate the calculation or do extensive scenario planning. The basic rule of thumb for when calculating this figure is that you will require about 20 times your current salary, assuming a 5% rate of return, to maintain your current lifestyle.
First, you need to have a realistic perspective of how much money you require to keep your present lifestyle. Your lifestyle expenses include everything you incur monthly. Let’s say, after adding up the costs of housing, basic living expenses, education, taxes, etc., you come to the sum of $4,000. Multiply that number by 12 and your annual cost of living is $48,000. Twenty times that amount is $960,000. That is a rough estimate of your financial freedom number. Don’t let that number scare you. All it takes is some planning to get there.
What number did you come up with? Is it more or less than you expected?
Now What?
Once you’ve calculated your financial freedom number, you’ll want to create a game plan to obtain it. This is where we come in.
Though our financial planning process we work together with our clients to identify their number and create a plan for how to reach that number. Often, our clients are thrilled when they realize there are options available to achieve financial freedom in less time than they expected.
Once you find your number, make a point to keep it at the forefront of your mind and come up with different strategies to get there. If the goal of your life’s work is to reach complete financial freedom, this process will help you identify the shortest path between where you are now and where you want to go. Finding balance in your life may be closer than you ever thought possible.Take the first step today toward securing your financial freedom by calling 916-781-7493 or emailing bkjohnson@ft.newyorklife.com.
About Blaine
Blaine Johnson is an agent with New York Life Insurance Company and a financial professional with nearly a decade of industry experience. He specializes in providing financial and insurance services for pre-retirees and retirees including physicians, executives, and business owners. By focusing on a particular clientele, he can provide a customized approach that responds directly to the specific needs of clients. He is a Life Underwriter Training Council Fellow and holds the Certified Long-Term Care designation. Based in Roseville, California, he works with clients throughout Sacramento and the Bay Area, as well as Southern California, Arizona, Nevada, Florida, Texas, Oregon, and Washington.
Blaine Johnson, CLTC, LUTCF®, is a Registered Representative offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency, 2999 Douglas, Blvd Suite 350, Roseville, CA 95661 (916) 781-7493. The Nautilus Group® is a service of New York Life Insurance Company. New York Life, its member agents or employees may not give legal, tax or accounting advice; everyone should seek and rely upon the counsel of his or her own professional advisors. California Insurance Lic. #0G27275.
