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Am I behind on retirement savings (financial freedom)?

by John R. Berry

Here at our office, we get this question a lot:

“Can I afford to retire?”

Usually this is asked by someone aged 60 to 65 who is very much ready to retire. Clients have worked hard to get where they are today. And they may be tired.

The question that’s really being asked, though, is “Can I afford to stop working?” In other words, have I achieved FINANCIAL FREEDOM? Financial freedom is having enough income from investments or other sources to not have to work anymore. Not everyone who is retired is financially free, and not everyone who is financially free is older than 60.

As you enter your 60s, it’s usually a matter of fine tuning—really putting pencil to paper on income sources and expenses, Social Security, and pension options. Folks approaching retirement age CAN save more for a few years, but their best compounding years are typically behind them.

A question we hear less often, but would like to hear more of, is:

“Am I behind saving for financial freedom (usually called retirement)?”

This question should be asked by everyone no matter what their age. Overachievers seek financial advice as soon as they jump into the workforce, but a normal time to consider it is in the mid-forties to mid-fifties.

So if you’re in your mid-forties to mid-fifties, I’ll ask you, “Are you behind in your journey toward financial freedom?”

While you’ll see a lot of rules of thumb online, in my experience retirement plans are very unique to the individual or couple.

When we work with folks to answer this question of whether they are behind on saving, we look at many factors, including budget, income, and debts.

Age, current investments and savings rate, employer benefits, Social Security, and comfort level with investing also play major roles in determining whether you’re on track.

Whether you  call it retirement or financial freedom, asking whether you’re behind in saving now can make a big difference when it’s time to answer the question, “Can I stop working?” when you’re older.

I encourage you think about it today.

CERTIFIED FINANCIAL PLANNERTM John R. Berry may be reached at (940) 325-9800.