Money Musings 💭 How to make work optional 📩
If you’ve been here a bit you probably know I am all about taking small consistent steps in our financial lives because they lead to big results. That’s what being a financial adult is all about!
Those small steps can have even more of an impact when they are coordinated and lead to the completion of a big task.
For example, in June / July, I shared a series of money moves that got you recession ready. If you followed along and took action, that’s a big accomplishment 👏. If you didn’t, there’s still time. Then we put together a travel budget in August.
I want to do it again with another big goal - getting to work-optional. Work optional is a rebrand for what we traditionally call retirement.
It’s a term I first learned from Tanja Hester and I have never gone back.
Work optional is the point in your life at which you no longer need to work to pay your bills. You have saved enough money (in what may be called a nest egg) that you can live off your investments.
Your income is made up of a combination of your investment returns (or investment growth and dividends) and selling the investments themselves.
It’s a beautiful thing.
The sooner we start investing for retirement, the less we need to invest. That's thanks to another beautiful thing called compound interest. Our interest grows interest. Ah. Lovely.
While I check-in on my retirement balances at my money parties quarterly (for fun 😆), I do a more robust retirement check-in once per year.
Starting today, the weekly money moves will be walking you through my 4-step process.
Keep me posted on how it goes!
MONEY MOVE OF THE WEEK
WORK OPTIONAL CHECK-IN #1 - TAKE INVENTORY.
Like I mentioned above, work optional is the point in your life at which you no longer need to work to pay your bills.
You have saved enough money (in what may be called a nest egg) that you can live off your investments.
Over the next four weeks we’re going to talk about how to make work-optional life happen.
First, let’s take inventory. We grow this magical nest egg in tax-advantaged accounts specifically for retirement - like a 401(k), 403(b) and/or IRA. You may also have money in a regular investment account that you plan to use for retirement.
List out all the places you are saving for retirement. Include the name of the account, the balance and how much you are contributing each paycheck or month.
YOU GOTTA SEE THIS
FINANCIAL PROFESSIONALS - WHO IS WHO AND WHO DO YOU NEED?
Sometimes we want or need financial help but when it comes time to look for a good match, the many titles and labels are confusing and daunting. This can keep us from getting the help we need.
Here are some key things to know.
Financial Advisor. A financial advisor is someone who manages your investments. You typically open an account with them (or their firm) and they invest your money for you. This is a very broad title. Here are some things to know about and look for in a financial advisor.
How they are paid. A fee-only advisor receives a fee you pay (usually as a % of your assets invested) whereas a fee-based or commission-based advisor also makes money by referring and selling you products. Choosing a fee-only advisor removes conflict of interest.
Fiduciary vs suitability standards. If an advisor is bound by fiduciary standards, they are required to put their clients’ interest above their own. Broker-dealers (usually advisors through brokerage companies) only have to fulfill a suitability obligation, which means they are only required to recommend what is suitable and not harmful for you. The fiduciary standard is the way to go.
Certified Financial Planner (CFP). A CFP is technically a type of financial advisor (I know, it’s confusing). Financial planners do not always manage your investments and usually have a more holistic view of your finances (outside of just your investments and insurance). They help you come up with a financial plan and can also provide a second opinion when you’re working with other financial specialists like insurance agents or tax professionals.
Money Coach / Financial Coach. A money coach is someone who can help you create money goals, overcome setbacks and break through barriers holding you back from those goals. Some may help you put together a financial plan but also might work with you on the emotional and behavioral sides of your money, like your relationship with money.