Back to Basics: Financial Independence

Financial Independence

Back to Basics: Financial Independence

* This article was originally published on March 11, 2020. It has been updated for 2021.

When you think of “financial independence,” does “retirement” come to mind? Or perhaps you connect more with the idea of living your life without having to worry so much about the money side. 

Many people today strive for the day when work is no longer mandatory. As they work to become financially free earlier in life, work may still be part of that life, but it’s not the focus. It’s something they do on the side or with a more leisurely mindset.

You may have heard stories about people who reduced their spending and increased their savings to the extreme so they could retire in their 30s, 40s, 50s — or even 20s. The good news? You don’t have to live on rice and beans or ramen! There are no rules to living your own version of financial independence and designing your comfortable future. 

Whether you plan to retire early, want to work a few elements of financial independence into your everyday life, or fall somewhere in between, let me break down some aspects of financial independence, starting with the basics.

Ready to Define what Financial Independence Means to You?

We have an FPFoCo Academy module on that! Log into the Academy and head to the “Planning for Financial Independence” section. 

Financial Independence

Most definitions of financial independence relate to work — or better yet, not having to work. While that might sound great, financial independence can mean different things to different people. For some, it’s the day when their investments can pay for their expenses and they don’t need to rely on working to earn income. For others, it’s saving and counting down the days until they’ll stop working for good and begin a more traditional retirement. And still others will continue to work for social reasons or because they love what they do after they’ve achieved their version of financial independence! 

Financial Independence Considerations

In addition to not having to work, the other benefits of financial independence may seem obvious. From freeing up your schedule and being able to spend your time as you’d like to becoming more financially self-reliant and not having to rely on others to live your best life, the perks are many. Overall, financial independence allows you to make the best use of your time — rather than dedicate that time to earning a living. This can mean less stress plus more time for yourself, with family, on vacation — whatever! 

These perks exist, but it’s important to consider the full picture because financial independence isn’t always rosy. Prior to achieving it, you may need to scrimp and save to make financial independence happen on your timeline. Because of this, you may miss out on experiences your peers enjoy. Similarly, you may find yourself at a different life stage than many of those around you. While you’re living intentionally while saving up to stop relying on your 9-to-5 job ASAP, they could be planning a luxurious vacation — and be looking at another 20 years of work before they retire!

Fear of missing out (FOMO) aside, if you plan to reduce your reliance on work or want to stop working altogether, the funds you build will likely need to last many years longer than a traditional retirement — and you’d need to accumulate them in a shorter time frame. Plus, if you step back from the working world, you may need to replace employer-provided benefits with individual policies. These benefits on your own can be pricey — especially on a more limited budget. 

If you stop working or reduce your workload significantly, you also miss out on the money you would have made during those working years. Compounding the matter is that you could miss out on your highest-earning years. When educated Americans earn the most in their 40s and 50s, earning less or no income during those years would mean missing out on increased Social Security benefits as a result. And don’t forget to watch out for inflation!

Also, keep in mind that you can’t withdraw from qualified retirement plans or traditional IRAs until after age 59½ — unless you’d like to sacrifice some of that hard-earned savings to pay taxes and penalties. On the bright side, this is where Roth IRAs can come in handy due to the ability to withdraw contributions without taxes or penalties under certain conditions.

Achieving Financial Independence

If you decide you want to become more financially independent, how do you get there? While you don’t have to work a high-income job to add elements of financial independence to your life, it does require a long-term outlook. Here are some tools you can use to get started or check in on your progress:

Put your financial independence goals in writing along with mini-milestones to track your progress along the way.

Share your goals with friends and family who can hold you accountable and cheer you on along the way.

Make a savings plan — and stick to it!

Review your budget and align your spending habits with your values and goals.

Pick up a side gig to boost your income and ability to save.

Utilize your employer-sponsored retirement plan, especially if you have access to employer matching.

Find a time to talk with us about investment options for building wealth.

Work with Jason to plan for changes to your tax situation now and strategies you can use down the road.

Reward yourself for reaching your mini-milestones and goals to inspire yourself to keep going!

Want to work toward financial independence or maybe even retire early? Whether you plan to spend your time volunteering for your favorite cause, take on a shelved passion project, or want to spend the rest of your life relaxing on a beach, the process to achieve financial independence can mean big life changes. And don’t forget that the plan should include what you’ll do after achieving financial independence — not just how you’ll get there. You probably wouldn’t want to end up bored with your free time or overspend and have to go back to work after such an achievement!

So if you’re looking forward to a more traditional retirement or just want more financial wiggle room earlier in life, let us know. We’ll help you create a plan that includes all aspects of your life and your goals.

Ready to schedule your next meeting?

Simply head to the Meeting page where you can find and schedule a convenient time to discuss whatever is on your mind.

Regina Neenan
regina@fpfoco.com

Regina Neenan is a Financial Paraplanner Qualified Professional™ and the Cash-Flow and Insurance Planning Specialist at Financial Planning Fort Collins. With a lifelong passion for personal finance, they have been serving FPFoCo clients since 2018. You can learn more about Regina on our About page.



MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds.
ANNUAL FEE
1.00% of assets under management ($100 per $10,000 managed). Debited from your account(s).
FINANCIAL PLANNING
Strategy:FOCO financial planning services are ongoing, and include unlimited phone, email, web and in-person meeting and consultation time. Pricing is based on the unique circumstances of each client situation. Generally, there is a one-time plan development fee ranging from $500 - $2,000 and a monthly fee of $150 - $500; cancel anytime. Clients utilizing investment management services with portfolios of $500,000 or more will typically receive financial planning services for no additional fee.
INVESTMENT MANAGEMENT
Assets Under Management (AUM)Annual fee as a % of AUM or flat-dollar
$0 - $249,999(See Invest:FOCO)
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 - $2,999,9990.50%
$3,000,000 - $3,999,999$15,000
$4,000,000 - $4,999,999$20,000
$5,000,000 or more$25,000 + $2,000 per additional $1mm
MINIMUM ACCOUNT SIZE
There is a minimum initial investment of $100,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities.

Minimums do not apply to inStream proactive financial planning as a stand-alone service.
ANNUAL FEE
Assets Under ManagementFee as a % of AUM
$100,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%

inStream proactive financial planning as a stand-alone service: $1,000/year or $100/month
MINIMUM ACCOUNT SIZE
There is a minimum initial investment of $100,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities.

Minimums do not apply to inStream proactive financial planning as a stand-alone service.
ANNUAL FEE
Assets Under ManagementFee as a % of AUM
$100,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%

inStream proactive financial planning as a stand-alone service: $1,000/year or $100/month
MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds. Invest:FOCO is currently available for Individual, Joint, Traditional IRA, and Roth IRA registrations.
ANNUAL FEE
0.65% of assets under management ($65 per $10,000 managed)
MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds.
ANNUAL FEE
0.65% of assets under management ($65 per $10,000 managed)
TAX PREPARATION
Invest:FOCO clients are eligible for a 10% discount on income tax preparation services offered through Fort Collins Tax Service, LLC. This discount applies to the base cost for return preparation as well as Schedules B & D. More details can be found here.
MINIMUM RELATIONSHIP SIZE
There are no minimums when utilizing inStream proactive financial planning as a stand-alone service.

When investment management services are desired, there is a minimum initial investment of $125,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities. inStream proactive financial planning is then included at no additional cost.
ANNUAL FEE
inStream proactive financial planning as a stand-alone service: $1,250/year or $125/month

Assets Under ManagementFee as a % of AUM
$125,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%
TAX PREPARATION
Strategy:FOCO clients are eligible for a 50% or 100% discount on income tax preparation services offered through Fort Collins Tax Service, LLC. This discount applies to the base cost for return preparation as well as Schedules B & D. More details can be found here.
Monthly Economic Update
Stay in the loop with our Monthly Economic Update. It's a great way to catch up on the things effecting your financial plan in an easy to read and relatable format.

We promise to only use your name and email address for sending our Monthly Economic Update. We will not sell, rent, lease, loan, or use your name or email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
Monthly Economic Update
Stay in the loop with our Monthly Economic Update. It's a great way to catch up on the things effecting your financial plan in an easy to read and relatable format.

We promise to only use your name and email address for sending our Monthly Economic Update. We will not sell, rent, lease, loan, or use your name or email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
MINIMUM ACCOUNT SIZE
Minimums do not apply to always-on, real-time financial planning as a stand-alone service.

For investment management services there is a minimum initial investment of $125,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. Investment management fees are generally debited from the accounts to which they apply. Financial planning services are included for Strategy:FOCO investment management clients at no additional charge.
ANNUAL FEE
Always-on, real-time financial planning as a stand-alone service:  $125/month or $1,250/year

Assets Under ManagementFee as a % of AUM
$125,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%
Five Savings Secrets
Are you 30 - 60? Let us give you a few tips with our free white-paper: Five Savings Secrets. Then stay in the loop with periodic emails featuring relevant information on financial planning, investment management, and income taxes.

We promise to never sell, rent, lease, loan, or use your email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
Notice

This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the privacy policy. If you want to know more or withdraw your consent to all or some of the cookies, please refer to the privacy policy.

By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to the use of cookies.

FINANCIAL PLANNING
Financial planning services are ongoing, and include unlimited phone, email, web and in-person meeting and consultation time. Pricing is based on the unique circumstances of each client situation. Generally, there is a one-time plan development fee ranging from $500 - $2,000 and a monthly fee of $150 - $500; cancel anytime. Clients utilizing investment management services with portfolios of $500,000 or more will typically receive financial planning services for no additional fee.
INVESTMENT MANAGEMENT
Assets Under Management (AUM)Annual fee as % of AUM or flat-dollar
$0 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 - $2,999,9990.50%
$3,000,000 - $3,999,999$15,000
$4,000,000 - $4,999,999$20,000
$5,000,000 or more$25,000 + $2,000 per additional $1mm
ESTIMATE YOUR FEE
Your fee is determined by the complexity of your needs and situation. The primary proxy we use for complexity is your investable net worth, which is generally your total net worth, excluding your primary residence. Your investable net worth includes the value of cash, bonds, stocks, mutual funds, rental real estate, and other business or financial interests. This aligns with the holistic nature of our comprehensive services. You can use the chart below to estimate your fee based on your investable net worth. In some circumstances, your fee may be more than the minimums in the chart below.
Annual Fee Investable Net Worth (INW)
$4,000 (minimum for an individual)Up to $500,000
$6,000 (minimum for couples)Up to $1,000,000
$8,000Up to $1,500,000
$10,000Up to $2,000,000
$11,000Up to $2,500,000
$12,000Up to $3,000,000
+ $1,000per additional $1,000,000 of INW
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Do you have a cash surplus? Learn more what to do with extra money in the free-preview of our Teachable course: Sudden Money and Windfalls.

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Are you here because of a big change in your finances? Subscribe for our PDF on 6 questions to learn the benefits of working with a full-time fiduciary.

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Inheriting Money Can Be Overwhelming.
We have the expertise to be your guide as you navigate receiving a windfall.
Equity Compensation Can Be Confusing.
Let us make it less complicated for you. Whether it’s a one-time award or ongoing compensation, we know how to help.
ESTIMATE YOUR FEE
Your fee is determined by the complexity of your needs and situation. The primary proxy we use for complexity is your investable net worth, which is generally your total net worth, excluding your primary residence. Your investable net worth includes the value of cash, bonds, stocks, mutual funds, rental real estate, and other business or financial interests. Our transparent pricing aligns with the holistic nature and value of our comprehensive services. You can use the chart below to estimate your fee based on your investable net worth. In some circumstances, your fee may be more than the minimums in the chart below.
Annual Fee Investable Net Worth (INW)
$4,000 (minimum for an individual)Up to $500,000
$6,000 (minimum for couples)Up to $1,000,000
$8,000 - $12,000$1,000,000 - $3,000,000
+ $1,000per additional $1,000,000 of INW