How Do You Plan For Financial Independence In Retirement?

In this article, I will describe to you the path to financial independence in retirement. However, I would like to draw attention right away that the concepts of financial freedom and early retirement should not be confused with frauds and frauds that promise quick wealth.

Those who know where the gold does not sell pickaxes and shovels, and they do not tell anyone where the mine is anyway! So why am I sharing such a secret here?

Because, first of all, it’s not a secret; It’s a fact that has been known for 5000 years. While everyone wants to be rich, unfortunately, very few people can manage to spend effort, time, and resources for this. Moreover, unlike the gold mine, the information I will explain in this article does not have a competition or exclusion effect, so sharing it will not reduce my well-being. 

Financial freedom, freeing ourselves from the necessity of working a permanent job and the hustle and bustle of the day; It is the opportunity to spend time with our loved ones and the things we enjoy, and to turn our savings into social benefit so that others can also create added value.

What Are The Steps To Calculate And Ensure A Comfortable Retirement Income?

Another thing I need to underline is that the theme of financial freedom and early retirement is not a strategy that I directly advocate and implement.

Due to my interest in reading and research, I have reviewed books, articles, and many posts on this subject; I listened to the stories of those who said they were successful, and I took notes on the areas that I thought were important and added them in a holistic framework to my portfolio management strategy that I was currently implementing. 

Some implement strict programs on this issue, which has attracted attention recently, and I differ from them in this regard. However, at the core of the matter, there are many common points where we meet.

First of all, I will explain what the concept of FIRE is and what it is not, and share the calculations necessary to set goals and progress on this path with detailed Excel tables. I have added these tables to the end of the article so that you can make calculations by determining appropriate criteria for different assumptions.

FIRE is just the tip of the iceberg. Therefore, in the second and third parts of the article, I will discuss the connections between Budget Management and Portfolio Management, which are indispensable ( sine qua non ) elements of the system.

Since these three items should be considered together, I will present these studies in the same excel table so that you can follow the calculations that I have prepared in an integrated manner, where the output of one is the input of the other. Although I used three headings in the article, they are of a combined nature that includes references to each other.

How Can You Create A Diversified Retirement Portfolio For Long-Term Security?

One of the most effective investment strategies for long-term financial stability, including retirement, is to create diversified portfolios. Investment projects created with different asset classes are less affected by possible risks and offer a safer investment model.

Diversification, which allows you to more successfully manage the risk of your investment portfolio, may require researching different asset classes. Nowadays, thanks to online banking solutions, you can easily create diversified investment portfolios thanks to different assets and market types, from cryptocurrencies to gold or other types of forex. There is also time to spare for these during retirement.

What Role Do Retirement Accounts, Annuities, And Social Security Play In Retirement Planning?

Retirement accounts are the basic building block for annuities, social security, and retirement planning. Thanks to the retirement account, individuals can access opportunities such as tax advantages and also benefit from great savings programs.

While annuities provide permanent income during retirement, they also support financial stability as a form of retirement income thanks to social security. Thanks to these tools offered by retirement accounts, your quality of life and financial status never decreases even during retirement.

Can You Share Retirement Success Stories And Strategies From Retirees?

In 2013, when he was only 40 years old, Jensen set the goal of creating a $1 million portfolio and retiring within 1,500 days. He started a blog called “1500 Days to Freedom” to document his and his wife Mindy’s journey.

When the Jensens began their plan in 2013, they had approximately half a million dollars invested. However, with a specific early retirement goal in mind, they revamped their investment strategies and began to see results. 

They said their investments exceeded seven figures for the first time in 2016. The couple, who are in their early 50s and reside in Colorado, told Business Insider the details of their investment journey. Here are the details of the Jensen family’s investment journey.

The Jensen family shares all the stocks and funds they own on their blog. The couple has about $2 million invested in individual stocks. They mainly own technology stocks such as Tesla, Meta, Amazon, and Google.

The couple learned that there were other ways to invest money in addition to the shares they purchased in the early 2010s before they started their early retirement plans.

Individual stocks make up the largest portion of their portfolio (about 42 percent). However, this does not fully reflect the couple’s investment philosophy.  “Holding individual stocks isn’t a great way to grow our wealth,” Mindy said, “because we could just as easily have invested in a stock that wasn’t going anywhere.

But for the most part, we did so well with our stocks because Carl did a lot of research. He worked in technology, so he bought into these companies.” “He knew them and believed in their mission and vision,” he says.

What Are The Common Mistakes To Avoid When Planning For Financial Independence In Retirement?

Some mistakes are common during the retirement planning process. The most common of these include abandoning the retirement plan early, neglecting to create an emergency fund account, and not spending by the budget and savings programs.

Your consumption habits, financial goals, and future perspective should be determined honestly and clearly for you, and a retirement program should be followed accordingly. Giving up or neglecting this process may prevent you from gaining financial independence in retirement.

See you in the next post,

Anil UZUN