Financial Abundance

When working with my clients, a primary focuses is to determine what financial resources are required to assure an abundant retirement.   An “abundant retirement” includes all of a person’s needs and many of their desires.  As a minimum, it should include a lifestyle that is at least as financially abundant as their pre-retirement lifestyle.

Let’s look at some ways that you can assure yourself an abundant retirement.

1.  “Paying yourself first” helps assure adequate finances for your retirement.

“Paying yourself first” means putting your income into a retirement plan or a savings plan before using these funds for any other purpose.  If you save ten percent of your pre-tax income, throughout your working years, you will likely have more than adequate financial resources to live an abundant retirement.

2.  Use tax advantaged approaches whenever possible.

My book, Financial Abundance Guide, presents many tax favored approaches to saving for retirement, paying for a child’s college education, paying for healthcare and more.  As I demonstrate, if you are in the 25% federal tax bracket with a 5% state tax, a tax advantaged approach will provide approximately one third more to your total savings.

3.  Have a globally diversified investment portfolio.

Well diversified asset allocations and minimizing investment expenses are two of the most important investment approaches to building long-term wealth.  Since the easiest way to pay off our massive federal debt is through inflation, it is likely that our government will take the path of higher inflation and US dollar devaluation to minimize the pain of paying our federal debt.   Your investments should include some inflation protection as well as global exposure.  One easy way to ensure global exposure is to invest some of your assets in financially strong, global US companies.

4.  When investing, use logic not emotion.

Successful investing requires the investor to buy at lower prices and sell at higher prices.  With this being so obvious, why is it that the average investor’s long term returns on stock market investments are less than the total return the S&P 500.  Studies have shown that the inferior individual investor’s returns are a result of emotional vs. logical investing.  When the stock market is high priced and fully (if not more than fully) valued, many investors become overly euphoric and buy at these high prices.  When the stock market declines, investors are often filled with fear and sell at lower prices.  When investing logically, an investor will buy when stocks are below their intrinsic value.  The logical time to sell is when a stock’s price exceeds a company’s intrinsic value.  A logical approach requires unemotional discipline.

5.  Refinance your home with a low cost, fixed rate mortgage.

Within the next few years, prolific government spending will likely lead to higher inflation and higher interest rates.  Fifteen or thirty-year fixed rate mortgages, that are still available with interest rates of approximately five percent, may seem like a great bargain in the not too distant future.  Unless you plan on staying in your house less than five years, refinance any ARM mortgages with a low cost fifteen-year or thirty-year fixed rate mortgage.  A fixed-rate mortgage provides the same monthly payments throughout the life of your mortgage, regardless of the direction of future interest rates and inflation.

After working for forty or more years, the “American Dream” should include an abundant retirement.  In the private economic sector, pension plans are typically no longer available.  Social Security’s long term viability also remains an unanswered political question.   An abundant retirement in the 21st Century requires you to take control of your personal finances.  Following these steps can help you along the pathway to a financially abundant retirement.