WE live in a world of bounty, replete with opportunities. Unfortunately, most of those treasures lie behind opaque, locked doors. Thankfully, you possess the master key that opens those doors that are right for you.
That magical key is your Power of Choice.
If you take a moment to look back upon the choices you’ve already made that have crafted and created the life you’ve carved out for yourself thus far, you will be able to trace the early choices you made forward onto the road that has brought you precisely to where you are today.
Are you under-earning today because you chose to be lazy in school and at work? Or are you fit and strong today because you chose to eat well and exercise often? Or are you wheezing up the stairs today because you chose to ignite two packs of cigarettes every day of your adult life?
We’ve all made bad choices. We’ve all made great choices.
Some of our “destinations” have been wonderful, some mediocre, others sad and a few ghastly!
Thankfully, much of our life is still in flux. That means it can be improved if we make better choices guided by timeless principles.
In his book The Power of Choice, Sam Silverstein, an American author and professional speaker, wrote: “Our choices affect our thoughts and our thoughts affect who we are, what we stand for, and the footprints we leave on this planet.”
Silverstein’s words are profound, so do mull over them as I illustrate the importance of personal choices in the realm of financial planning, specifically retirement planning.
Unless you plan to die on the job, at some stage in your life’s journey you MUST retire.
So, when you finally retire, how will you continue paying for your living expenses during that final — possibly decades long — phase of life marked by no regular salary flowing into your bank account like clockwork at the end of each month?
What will you do? Do you have a plan?
What choices have you made up till now to prepare for your retirement?
What better choices might you make in the years ahead, particularly if you are still working today, that will help swing open that huge, heavy door to a genuinely golden era?
To focus your thoughts on the future, I suggest you cast your mind backward first: Did your grandparents and parents have a plan? How did they fund their retirement years?
Did they have government pensions? Or did they raise children who were filial and economically capable of giving them regular allowances large enough to allow them to age with dignity and more than a modicum of autonomous discretion (a term I invented which means they enjoyed reasonable control over the way they lived out their retirement years).
Most people will say they hope to tap into a lifetime of savings to fund their retirement. And that is a reasonable — if somewhat less than ideal — solution.
Why would I say that?
While it is better to retire with some money salted away in a static pool of cash earmarked for your senior years than with no money at all, it is much better to construct varied streams of passive income that ceaselessly and continuously flow into a metaphoric lake you can draw life sustaining liquidity (money) from for as long as you breathe.
That truth is underscored in the book Wealth to Last by Larry Burkett, Ron Blue and Jeremy White in which they point out:
“As you age and transition to new phases of life, you will still need an income stream. The financial planning issues change from the accumulation of assets, the emphasis from the ages of the twenties to the fifties, to converting assets to income.”
Whenever I speak professionally on financial planning or consult with a new retirement funding client, I explain the difference between active income earned from a salary or an actively-run business, and passive income that flows in steadily after those vital passive income streams I mentioned earlier are established.
We all need passive income to thrive in retirement. And if you dare look beyond your retirement, then let’s say the judicious use of estate planning or wealth distribution tools like a will or trust can allow the resources flowing into your lake and sloshing within the lake itself to be bequeathed to your loved ones and to charities you care about once you stop breathing and permanently cease needing money.
You can make wise choices today that will permit you to create passive income streams in the form of interest, coupons, distributions, dividends and rental inflows.
In the next few weeks I plan to outline for you logical steps you might take that are powered by wise choices you can certainly make to prepare for your eventual retirement.
© 2017 Rajen Devadason
Read his free articles at www.FreeCoolArticles.com.
Connect on rajen@RajenDevadason.com, www.linkedin.com/in/rajendevadason and Twitter @RajenDevadason
Rajen Devadason, CFP, is a Securities Commission-licensed financial planner, professional speaker and author.