Defining Financial Independence

Welcome to the Money Wisdom Podcast where Joel Johnson, CFP® of Johnson Brunetti, reviews retirement and investment topics weekly. Let’s get started…

Today’s Wisdom:

It’s no secret we all want financial independence, but what does that mean? We’ll tackle what it looks like to live freely in retirement.

What You’ll Learn:

[3:22] – Independence From Government Assistance Is A Good Thing.

  • We’re not saying the government’s bad, but it’s good not to have to rely on Uncle Sam. Having independence from government assistance gives you the freedom to choose how you want to be cared for in retirement.

[5:22] – Achieve Financial Independence From Family.  

  • Simply put, you don’t want to have to rely on your children to take care of you in retirement. If you spend too much on them now, you’ll be relying on them later.

[6:30]  – Don’t Rely On Your Job.    

  • It’s a freeing feeling not to have to rely on your job for a paycheck. Continue working or start a second career because you find your work to be fulfilling, not out of necessity.

[7:58] – Independence From Wall Street Is Desirable.

  • Hear us loud and clear. We’re not saying you need to take your money out of the market when you retire. Instead, we’re suggesting a change in perspective. Your income shouldn’t be dependent on the market in retirement. We don’t want you to have to cut your paycheck simply because Wall Street has had a bad day.

[14:40] – The Drawbacks Of A 401(k). 

  • The 401(k) is a wonderful tool for building wealth, but it’s not the best fit for everyone. Joel shares examples of instances in which a 401(k) might not be for you.

[15:14] – If Your Employer Doesn’t Match Your Contributions, Your 401(k) Becomes Less Appealing. 

  • Don’t miss what we’re saying. For most people, the 401(k) is a great tool for building wealth. However, if your employer doesn’t match your contributions, you could do better with that money in other places.

[16:49] – Are Future Tax Increases Worrying You?

  • If so, perhaps the 401(k) isn’t for you. After all, tax rates are at historic lows right now, and 401(k)s are tax-deferred accounts. This means if taxes rise, you could find yourself with a hefty tax bill when the time comes for you to withdraw from your 401(k).

[18:41] – Don’t Leave Your Money Behind.

  • If you’re leaving your company, consider taking your money with you. Roll that 401(k) into an IRA or somewhere else.

Final Thoughts:

“Your retirement could last for 30 or 40 years. We want you to live freely. Work with your advisor, and develop a plan that will give you independence in retirement.”  – Money Wisdom

Additional Resources:

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Thank you for listening!