In honour of America’s July 4th celebrations, I thought I’d devote this blog to helping retirement savers prepare their personal “Declaration of Findependence.”
The other day at Forbes.com senior writer Richard Eisenberg devoted a piece to this theme, and cited my own recent experience in finally living the life I describe in my book, Findependence Day. Findependence, of course, is merely a short-hand description of the phrase financial independence. Findependence day is the day in the future when you believe that income from all sources—including investments, pensions, rental income, business income, royalties–will exceed income from the single source most of us call a “job.”
So, without further ado. It’s up to you to fill in the blanks to reflect your personal circumstances:
Declaration of Findependence for ________ (your name here)
1.) Based on my current age of __, I believe I should aim for the __ day of the __ month in the year 20__. This happens to be the year I turn __.
2.) I understand that as this milestone approaches, the actual date may have to be revised. If financial markets are very strong, I may even be able to move it ahead by __ years. If markets are weak, I may be forced to move it back by __ years.
3.) I am currently employed by ________________ and am enrolled in a pension plan. The earliest date I can take an unreduced pension is ______. I can also take early retirement by _______, provided I am willing to receive a smaller payout.
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4.) As an American with ___ years in the workforce, I am eligible to begin taking Social Security benefits as early as age 62, which is ___ years before/after my planned Findependence Day. The latest I can take them is age __, in which case the payout will be much higher. Based on my annual contribution statements, the optimal time for me to commence Social Security is age __.
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5.) Depending on whether I was born before or after Feb. 1, 1962, I will be eligible to take Old Age Security (OAS) benefits at age 65/66/67. (Circle one). If OAS is my only source of income in old age, I will also be eligible for the Guaranteed Income Supplement. Ideally, so is my spouse, in which case the day we’re eligible to receive combined OAS/GIS benefits will be our joint Findependence Day.
6.) As someone who enjoys work but not necessarily all the stresses of full-time corporate employment, I see myself being semi-retired or self-employed by age ___. By adding $_____ thousands of dollars of part-time income a year to all the above sources of income, my Semi-Retirement could begin as early as ____, which is the year I turn _____. I will call this my Preliminary Findependence Day.
7.) Instead of having one long extended Retirement at the end of my life, I prefer the concept of multiple “Mini Retirements,” and therefore of multiple Findependence Days to fund them. I would like to set the year _____ as the year of my first Mini Retirement, and therefore _______ will be my first (but not necessarily last) Findependence Day.