There is a constant fear of running out of money among the salaried middle class that has to divide the limited earnings between savings and investments before planning expenses. While this habit does help people amass the much-desired corpus, the fear of not having enough to meet post-retirement expenses keeps them on edge throughout. It is this unwarranted fear that not only forces people to cut down on many expenses but also limits them to a lifestyle they may not be accustomed to.
Defining ‘financial independence’
Many associate “Financial Independence” with retirement. They think financial independence is all about retiring early. Interpreting this term wrongly has caused many people to make wrong financial management decisions.
A closer interpretation of “financial independence” is about being free from money-related worries. Financial independence implies the freedom with which you can pursue your hobbies and ambitions without having to worry about losing your primary source of income. Financial independence is a feeling that relieves you from constant anxiety stemming from the most common and pertinent question, “Have I saved enough money to last this lifetime and leave behind something for my loved ones?”.
How do you check if you have saved enough money?
One may argue that only those who have enough money fear running out of money in the long run. After all, you fear losing only what you have and not what you are yet to have. Reviewing your financial condition regularly will not only relieve you of this unwanted fear but also ensure that you strictly adhere to your financial goals without going wayward out of impulse or boredom. You may start by corroborating the following details.
Do you have a regular income source for post-retirement period?
This is important as you must have enough money to take care of the golden years of your life. Devaluation of money is constant, which is why you must plan your future income sources only after assessing the future value of your current expenses while also including possible expenses associated with growing age. Health-related expenses must be taken care of though you must add the amount you would need to pursue your hobbies like travel or relocating to a new place and more.
Have you bought life insurance?
Life is uncertain. The fact that your loved ones would still have to continue living without you is certain. This also explains the need to make enough provisions for them to fall on. For this, you must have a life insurance plan. To start with, you must opt for a life insurance coverage amount equivalent to 10-12 times your annual income. Alternatively, club the essential expenses that you are paying for currently along with anticipated expenses on your children’s education, marriage, repaying the debt you had …….