Financial Planning - Achieving Financial Independence

Achieving Financial Independence

Introduction

This guide has been designed for WEAC Members and addresses financial planning and investment concepts. The intent is to augment and supplement the Financial Planning Seminars. All interpretations are of current law and regulations as of January, 2007.

Although the financial planning process may vary from practitioner to practitioner, the approach should be the same:

Step 1: Determine where you are financially by completing a personal balance sheet to determine your current net worth, and a cash flow profile to identify where your dollars are going. Obtain Social Security and Wisconsin Retirement System estimates.

Step 2: Identify and clarify your short, intermediate, and long-term goals. We are addressing only one goal: financial independence.

Step 3: Develop a course of action to best accomplish your goals. There are a number of issues that one should confront in pre-retirement planning. This information has been designed to help you focus on the issues.

Obviously, the more time that you have before your planned retirement date, the greater influence your strategies will have. Ideally, we begin our pre- retirement planning several years in advance of our retirement date. A financial plan and financial planner may be of great help to you, but the one thing they cannot do is provide you with time. Addressing an issue ahead of time produces alternatives and advantages that are manifold. The optimum time to begin pre-retirement planning seems to be about age 35. Accomplishing goals and objectives and preparing for the future require the simple act of doing.

More people fail to fulfill their plans because of procrastination than for any other single reason.

Step 4: Review and update your plan periodically. On an annual or bi-annual basis, reconstruct your balance sheet and cash flow statement; review the performance of your investment portfolio and, if necessary, make adjustments; and review tax shelter annuity options. Be sensitive to the impact of major events in your financial life such as births, deaths, job changes, winning the lottery, or an inheritance - all of which will affect your financial plan.

For most WEAC Members, do-it-yourself financial planning is possible with the support provided by WEAC; but to be a successful self-planner you must be motivated and interested enough to expend the effort and considerable time necessary to develop, implement and monitor a successful plan. The member that chooses to make the effort will be in a position to save a substantial amount of dollars in fees and/or commissions. If, for whatever reason, doing your own financial planning is not feasible, no simple solution awaits you in choosing the right financial planning professional. My thoughts on how to choose a financial planner are on page 72 of the booklet.

Requests for advice or to arrange an individual financial planning consultation, can be made by contacting my office at WEAC, 33 Nob Hill Drive, P.O. Box 8003, Madison, WI 53708, 608-276-7711 or 1-800-362-8034, extension 253; or e-mail moellerb@weac.org.