Many of us look forward to that day when we no longer have to work, but rather choose to work or not to work depending on how we feel.
It’s that day when our nest egg has grown large enough to generate the income we need to live on without the fear of running out. News 3 spoke with our financial resource Carl Carlson, CEO and founder of Carlson Financial, to get his 5 Simple Ways to Achieve Your Financial Freedom Goal.
Number 1 – Carlson said the best way to achieve the goal is to know the goal. That is, how much money do you need and by what date will you achieve it. For instance, if you and your spouse are now age 30 and you want to be Financially Free by age 50, which you define as having $50,000 per year to live on without working. Let’s say that means you need $900,000 saved up and you have $50,000 now. If your current combined income is $100,000 per year, then perhaps you need to save about $10,000.00 per year, which may this seems like an impossible feat, Carlson said.
Once you know your goal, how can you make what can feel like an insurmountable goal feel achievable?
Number 2 - Get your company match. Carlson said imagine both you and your spouse’s companies will match up to 5% of your salary. The match says that if you put $5,000 in your retirement plan, they will add another 5,000. So, now you only need to save half as much or $5,000.
Number 3 - Put the money into your plan before tax. That means if your company is withholding about 25% federal and 5% state taxes, then by putting the money into your plan before tax, you will only feel your pay check being decreased by $3,500 instead of $5,000, according to Carlson.
He added, in order to make sure it happens, Number 4 is to automate the process. All you have to do is ask your Human Resources department to increase your contribution to 5% of your salary on a pretax basis; then it will happen every paycheck without you even having to think about it.
Carlson said Number 5 is start today.
“It will never happen if you think you will get to it tomorrow.”