5 financial freedoms you can’t afford to surrender
Most Americans work 40 to 50 years. That’s a huge time investment when you stop and think about it. That’s a long time to toil and end up getting little, if any, financial security out of all that hard work.
Everybody wants financial independence in their golden years, but without a sound retirement planning strategy, many lose the freedoms they could have enjoyed.
“Some freedoms are often taken for granted in this country, such as those you earn by maximizing your earning potential,” says Peter J. D’Arruda, president of North Carolina-based Capital Financial & Insurance LLC .
“It’s critical that you use your time for the most advantageous gains and invest your assets wisely. Even well-off and wealthy Americans fail to develop a sound financial plan that will carry them through retirement.”
D’Arruda lists five freedoms you’re surrendering by not protecting your assets:
• Guaranteed income. The day you stop working is the day you surrender your paycheck and guaranteed income. That’s a painful reality some aren’t ready for, thinking they had enough money from other sources, but miscalculated how new expenses, inflation and other factors would affect them. They lean on a finite Social Security check and watch their savings dwindle. “The transition from a lifetime of gainful employment to being unemployed and retired is a drastic change, especially without a strategic plan that would have ensured continued income through retirement,” D’Arruda says.
• Travel flexibility. Retirees rank among the top three groups of travelers in the U.S.; on average more than 20 percent of their retirement income is spent on travel. Even though they are no longer restricted to two or three weeks of vacation a year, they may find themselves home-bound in retirement if they didn’t protect their assets. “Without guaranteed income and establishing a smart financial plan that allows for travel, you may be seeing the world mostly through travel magazines,” D’Arruda says. “Didn’t you work too hard, too long to end up with no freedom to go anywhere?”
• Leaving a legacy. An inheritance left to children can be complicated and significantly compromised by taxes. “Unfortunately, the process of passing family heirlooms and other assets to the next generation can be a fiscal and legal nightmare, both to the giving and receiving ends,” D’Arruda says. “Without drafting proper documents with explicit details about how your assets are to be divided, you’re surrendering your freedom of legacy.”
• Having autonomy. Children rely on their parents. Some parents, running out of money, end up relying on their children. Some are forced to go back to work in old age. “It shouldn’t have to be that way,” D’Arruda says. “People need a plan with a diverse portfolio to ensure they won’t have to surrender their freedom of autonomy.
• Choosing your retirement age. By not calculating your planned retirement age and future cost of living, you’re surrendering your freedom to choose when you don’t want to work anymore. “There are a lot of factors that go into this number,” D’Arruda says. “Unfortunately, many people have given more thought about when they want to retire rather than what it will cost for them to do so.”
“Some people learn the hard truth that they have to work much longer than they expected,” D’Arruda says. “Again, it doesn’t have to be that way if you’ve planned well ahead to protect your assets.”