How to become financially independent

How to become financially independent


The news was alarming; at year-end 2017, U.S. household debt rose to $13.15 trillion—an all-time high. The recent study showed that rising debt comes with a price—less money in your wallet, as well as a burden on your emotional and physical well-being [1]. What’s even more alarming, perhaps, is that nearly four in five full-time American workers report living paycheck-to-paycheck [2].  

With rising health care and secondary education costs, it can be tough to find extra money in the budget to allocate towards saving for retirement. But most Americans don’t want to work forever, so saving for a financially-secure retirement should become a top priority. Let’s break it down.

Why everyone should put retirement first

What’s the biggest purchase you’ll ever make? If you answered “house,” try again. The correct answer is most likely going to be your retirement. That’s right—retirement is something you buy, like a car or a vacation. So then the question becomes, “How important is my ticket to quit working?” At all stages of your life, it’s important that you continuously plan and save for that “ticket to quit.”

Every day that you don’t buy enough retirement, you add retirement debt.

With that in mind, you may be wondering what you can do to prepare yourself to satisfy your retirement needs. Luckily, there are a variety of practical tactics you can utilize to reach your goal of achieving a comfortable, stress-free retirement.

Practical tactics to help you save for retirement

· Set a vision

According to a recent report, 81 percent of Americans say they don’t know how much money they’ll need in retirement [3]. But if you’re thinking about your retirement goal as a certain number in a bank account, you’re doing it wrong. Instead, think about what you want your retirement to look like. Do you want to retire early? Retire late? Travel often? Work part-time just to stay busy? Set a clear vision of what you’d like your retirement to look like before crunching any numbers.

· Have an idea of how long you’d like to be retired

After answering the questions above, you’ll have to answer one final question – how long do you want to be retired? The answer to this question will be determined by what age you want to retire and how long you plan to live. Not sure how to determine your life expectancy? Look at how long your parents and grandparents lived, and remember that you don’t have to be precise. Do people in your family tend to live into their 70s or 80s? 90s or beyond? Most people have a pretty good idea of their family history—and that’s all you need.

· Determine how many years of retirement you need

If you’ve decided that you want to retire at 65 and you know your family tends to live to their mid-80s, then you need about 20 years of retirement. And keep in mind, life expectancies are generally increasing—so if you can, try to pad the number and give yourself some wiggle room.

· Put a number to it

This is where your retirement service comes in. It’s possible to calculate the amount of money you need to buy the retirement you want, and you can work with your retirement service to work out a payment plan. Choose to pay a lot up front to get a discount, or pay a little now and more later. It’s easy! 

· Make the savings process as automatic as possible

Think 401(k). Many plans automatically enroll employees in the company-sponsored retirement plan with an option to “opt out” for those who aren’t interested. Saving for retirement becomes that much easier when contributions are made as part of the payroll process—and before taxes. You won’t miss what you didn’t have, right? 

· Compare retirement services

Great—now you’re “retirement rich” and “life poor.” Quite the contrary, actually. This is the Golden Age of Buying. Never before in the history of “buying stuff” has it been easier to get a lot of stuff for a little money. Want to go to a sunny beach? Trivago, Orbitz, and Kayak are all there to give you options at the touch of a button. Want a new flat screen TV? Amazon, Target, and Best Buy are lining up your options by features and price.

The key is to use those services when YOU want, not when THEY want.  You can be impulsive, adventuresome, or simple—the solutions for living life today on your terms are all around you. Better yet, think about what you’ll be able to do in retirement using those same services!

How many years of retirement will you be able to afford?

We’ve created PAi’s CoPilot 401(k) service as tool to help move you from just visualizing your retirement to actually getting you there. We’ve ditched the complex charts and calculations, and translated your dollars into the only thing that matters – how many years you can afford to be retired. We won’t tell you how to buy, others will. You’ll just know if you’re on track or not; no judgments.

Let’s start with a conversation, then let us do the rest of the work for you. Contact us online or give us a call to get your 401(k) plan started: 800.236.7400.


Michael Kiley, Founder and CEO