Category Archives: Financial Independence

House Republicans voted 233-186 Thursday to repeal large parts of the 2010 Dodd-Frank financial overhaul, just one month short of the seventh anniversary of the landmark laws enactment.

The measure would unwind much of the financial structure put in place in the wake of the financial crisis. One of the biggest pieces of legislation enacted during the two terms of President Barack Obama, Dodd-Frank was designed to prevent the type of practices that led to the 2008 financial crisis and the recession it caused. Republicans have long complained that the law stifled the economy because it put too large a regulatory burden on business.

All of the promises of Dodd-Frank were broken, said Rep. Jeb Hensarling, the Texan who is chairman of the House Financial Services Committee and who authored the bill. It promised us it would lift the economy, but we are stymied in the weakest and slowest recovery in the post-war era.

The vote to repeal was more partisan than the House vote on the law in 2010. Walter B. Jones of North Carolina was the only Republican to vote against the bill Thursday and no Democrats voted for it. Three House Republicans voted for Dodd-Frank in 2010 and 19 Democrats voted against it.

Dodd-Frank provisions reached deep into U.S. business and financial life, setting up a new agency to monitor financial products, a multi-agency supervisory body to identify risks to the financial system, and tougher disclosure and other regulatory standards for financial institutions.

Republicans forget that Dodd-Frank was passed in response to a crisis that pushed the unemployment rate to 10 percent, spurred 11 million home foreclosures and caused the evaporation of $13 trillion in private wealth, House Minority Leader Nancy Pelosi said Thursday.

Today House Republicans are pushing a dangerous Wall Street first bill that will drag us straight back into the days of the Great Recession, the California Democrat said, calling the measure dastardly and malicious.

Republicans say Dodd-Frank provisions made it harder for banks to provide loans to business. They complain that small bankers in particular have been handicapped by the cost of complying with the many regulations that emerged from Dodd-Frank.

The House bill is rife with provisions that drew veto threats last year from Obama, including a repeal of the Labor Departments so-called fiduciary rule and an overhaul of the Consumer Financial Protection Bureau, an agency established by Dodd-Frank..

Democrats say it would end protections put in place after the 2008-9 financial crisis, intimidate regulators by removing their financial independence, and effectively kill a dozen bipartisan provisions by putting them in a bill that Senate Democrats are expected to block because of its objectionable provisions.

I believe it will lead to the next financial crisis, said Rep. Stephen F. Lynch, D-Mass., a member of the Financial Services Committee. This is an awful bill. This is a real stinker.

The bill would repeal many key parts of Dodd-Frank:

The bill would also make changes to the financial regulatory structure that pre-dated Dodd-Frank. It would put the Federal Reserves bank supervisory function and the Federal Deposit Insurance Corporation into the appropriations process. And it would require an annual audit of the Fed.

The Congressional Budget Office said last month that Hensarlings bill would deliver more than $24 billion in deficit reduction over 10 years, including $14.5 billion from the elimination of the Orderly Liquidation Authority. Most of the rest of the savings would come from cuts to the CFPBs budget.

The House bill isnt expected to be taken up in the Senate.

Sen. Michael D. Crapo, chairman of the Senate Banking Committee, held a hearing Thursday on the importance of smaller, local banks. These community banks have been the targets of bipartisan, regulatory relief bills in recent years, such as a provision to lengthen the time between bank examinations by regulators.

The Idaho Republican promised more hearings in the coming months on regulatory reforms that would spur the economy with the goal of ultimately passing a meaningful and bipartisan reform package.

Among the specific changes he mentioned were measures to lessen paperwork and lift certain mortgage restrictions for community banks.

The House bill would likely have its greatest impact on the big banks. Dodd-Frank required banks with $50 billion or more in assets to adopt so-called living wills describing how they would be unwound if they failed, and subjecting them to enhanced, prudential regulation.

Smaller banks were exempted from Dodd-Franks main features, but stricter mortgage rules, compliance with the Volcker Rule, and what critics call a Dodd-Frank trickle-down effect are seen by Republicans and some Democrats as overly, and unnecessarily, burdensome on community banks.

House Speaker Paul D. Ryan, R-Wisc., told House members that our community banks are in trouble. They are being crushed by the costly rules imposed on them by the Dodd-Frank Act.

Smaller, local banks historically have lent heavily to small, local businesses. But rules requiring a more statistical approach to lending, as opposed to community banks strength of often actually knowing their borrowers, are blamed for community banks losing much of the small business lending market.

Republicans see economic harm because small businesses have created fewer jobs than in past recoveries.

But Rep. Gwen Moore, D-Wisc., said the Republican talk about the bill helping community banks is not fooling anyone.

This legislation unleashes every bloodthirsty, greedy Wall Street super-predator back to the American people to feast on our misery like they did pre-Dodd-Frank, she said.

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House Republicans Vote to Strip Away Post-Financial Crisis Safeguards - Roll Call

Those who are on track to be "financially independent and retiring early" -- or "FIRE" -- are.

You'd need to be fired up to sock away enough money to quit your job and retire in just five years. But it's not impossible.

Some people, like Claudia and Garrett Pennington take extreme measures like saving 67% of their income and making big lifestyle choices. They almost never eat out, have no cable subscriptions and even dramatically downsized their home.

While that's probably too much sacrifice for most people, see if you're on track to make it to financial freedom in 10, 15 or 20 years.

This couple is on track to retire -- before they turn 40

Being financially independent means that income from your investments alone is enough to cover all your expenses.

So how do you get there?

The sunshine that makes most retirement funds grow is compound interest. And it takes time to grow. But if you plan to retire early, you might not have as much time as someone targeting a traditional retirement.

As a result, the most important accelerant when working to be on "FIRE" is your savings rate. Most people targeting FIRE are living well below their means and saving more than half their income.

Identifying the percentage of your after-tax income that you're saving to get to your retirement target is key. Finding the right savings rate will get you to financial independence whether you're earning $50,000, $100,000 or $200,000 a year.

In order to make simplified calculation, we'll start with your after-tax income. We'll also assume you have nothing saved right now. You're starting from zero. And we'll assume that your investments earn a rate of return of 5%, and that you'll take 4% a year from your investments to cover your expenses.

You can also use an early retirement calculator like the one at Networthify to fill in your own numbers.

But given our assumptions, here are your target savings rates and a simplified financial picture of what it would take to retire in 5, 10, 15 and 20 years.

To retire 5 years from now

In order to be financially independent in five years, you're going to need to ratchet your savings rate all the way up to 82% of your income.

It's a pretty spartan life if you're earning $50,000 after taxes. Your annual expenses will need to squeeze in under $9,000. Yes, that's for the whole year. It is the sacrifice you'd need to make so that you can bank the other $41,000. Out of your monthly income, about $3,500 will go to savings. You'll need to have a sharp plan to get by on just $750 a month.

Even if you earn closer to $100,000 after taxes, you'll still be living a fairly basic existence on $18,000 a year while pocketing $82,000. Start thinking of creative living arrangements to stretch that monthly living budget of $1,500.

No matter your income, this savings rate is going to be possible only for those people with virtually no debts. That's why many people working toward FIRE start by paying off their mortgage first, or live a car-free life.

To retire 10 years from now

If you want to give yourself a little more breathing room and still become financially independent 10 years from now, you're going to need to boost your savings rate to 66.5% of your income.

That means if you're earning $50,000, your annual expenses will need to clock in under $16,750 a year so that you can sock away the other $33,250.

Out of your monthly income, $2,771 will go to savings and you'll have $1,396 to live on.

Again, housing costs will cut significantly into that money. But if you have incredibly low-cost or subsidized housing, you may be able make this work.

If you make $100,000 it gets a little easier. You'll have $33,500 for living expenses because the remaining $66,500 is going toward your future. You'll need to manage your expenses so you can live on $2,800 month.

To retire 15 years from now

You're up for saving hard to be financially independent, but maybe you have other debts you're carrying or aren't willing to make the extreme adjustments needed to save at a higher rate. Financial independence 15 years from now may be a reasonable goal. You're still saving over half your income, but only just. Your savings rate is 53.7%.

For those earning $50,000, your annual expenses will need to be under $23,150 a year so that you can save the other $26,850.

Out of your monthly income, $2,200 will go to savings. You'll have $2,000 to live on.

If you're earning closer to $100,000, you'll be living on $46,300 a year. You're saving a slightly larger portion: $53,700.

That means you're living on $3,858 a month and pocketing $4,475.

To retire 20 years from now

If you've got a little more time and want to set your sights at being financially independent 20 years from now, you can drop your savings rate to under half of your income and land at 43%.

If you're earning around $50,000, you're going to need to live on $28,500 a year. You'll pocket the other $21,500.

Out of your monthly income, $1,792 will go to savings and you'll keep the larger portion, $2,375, to live on.

For people earning closer to $100,000, this savings rate will leave you with $57,000 for living expenses annually, while you put $43,000 away for later. You'll have $4,750 for monthly living expenses.

This may be the most manageable savings rate of these options, but even this plan, if started early enough will put you on FIRE.

Are you working toward FIRE? Already there? Tell us about it and share your monthly budget, and you could be featured in an upcoming story on CNNMoney.

CNNMoney (New York) First published June 6, 2017: 11:50 AM ET

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How to become financially independent in 5 years - Jun. 6, 2017 - CNNMoney

If your child is graduating, there are several ways you can support their transition into financial independence. (Thinkstock)

Its the season for celebrating graduations and a good time to consider how we all might help freshly-minted graduates as they take on their first full-time jobs.

Todays college graduates are starting out with higher tuition debt, challenging labor markets at graduation and, according to a Pew research study, a significant number of these young adults will choose to stay unmarried well into their 30s. These circumstances impact their ability to establish financial independence and build a solid foundation for wealth creation throughout their adult lives.

So how can grads overcome these obstacles when they go from being a student to starting their fledgling careers? If your child is graduating, there are several ways you can support their transition into financial independence. Beyond providing actual funds, we suggest you encourage them to take these steps:

Grads will be transitioning from living off scholarship or loan money and having their parents pay for tuition and living expenses to the reality of paying their own bills. One of the first reality checks is getting that first paycheck and realizing it yields much less cash to cover living expenses due to taxes and other deductions.

One of the most important lessons you can teach them is to live in a way where their spending falls below their net pay. To get started, you might suggest your graduate follow a simple process of determining their known expenses such as rent, cellphone, car payment and utilities then track their spending on incidentals such as entertainment and clothing. Once this analysis is complete, they can begin to think about longer range goals or whether they need to change spending habits in order to have a sustainable and balanced budget.

Your encouragement and occasional checking in on how theyre doing with cash flow can help build confidence in their ability to independently meet their daily needs while still having something left for discretionary spending.

When creating the initial budget, remind your graduate to include the repayment of their college loans. For the class of 2016, the average graduate had approximately $37,200 in student loan debt. Since students are required to begin repaying college loans within six months of graduation, they need to be sure their spending includes this debt repayment requirement.

Graduates with higher incomes can work to pay off college debt at a faster rate, especially given their relatively high interest rates compared to money market earnings rates and the cost of other types of debt such as car loans.

Michelle Singletary, columnist for The Washington Post wrote a fantastic column, College grads face next hurdle: Paying back student loans, that I encourage parents and grads read. She points out that many grads are under the misconception that all loans must be paid back within 10 years. Actually, there are four options for repayment programs based on a grads income which helps with their ability to handle other living expenses while repaying these loans.

The next important lesson for those entering the workforce is the power of tax-favored savings through company retirement savings plans.

In most families today, at least one parent will have participated in some type of 401k or other retirement savings plan. Your experience and knowledge can come in handy when your graduate receives that stack of participant information from their employer. We suggest you review the investment options with them and make sure they are clear on whether the employer has a contribution-matching program. We encourage all participants, including early career employees, to save as much as possible in these plans and to prioritize contributing at least the amount required to receive the free money that comes in the form of the employer contribution.

We cannot overemphasize the benefit of compound returns which come from ongoing investment over a longtime horizon.

For more savings strategies, read Smart Savings Strategies for Millennials from a Millennial.

Another advantage for many younger investors is the ability to contribute to a Roth IRA. Roth IRAs do have income limits so they will need to confirm that their annual income falls below IRS maximums (in 2017 for singles, the contribution phaseout income limit starts at $118,000). Like company retirement plans, these are tax-favored savings plans making them a great wealth building tool when utilized over a lifetime.

Roth IRAs also have provisions allowing access to funds for education spending. This may be a better way to build up savings for graduate education instead of through a traditional 529 plan which is more restrictive than a Roth. We often suggest that parents consider gifting funds or supplementing investment into a Roth to take advantage of the annual maximum contribution limit of $5,500 in 2017.

Many students are able to establish their own credit history while still in college. This can be accomplished with lower risk by obtaining a credit card with both a low total credit limit and a direct link to a bank account. Many banks offer automatic monthly payment as a way to ensure the monthly bill is paid in full and on time to establish a positive credit history. If your college graduate has yet to manage a credit card on their own, get them started now. Having a positive credit rating will help them save money on car loans, home mortgages and on future life insurance.

Another way to establish credit for the purpose of securing a lease is to pay college rent directly from your students bank account. Even if you are supporting the rental costs, its advantageous to establish a history of on-time rent payment by having funds come directly out of an account in your young adults name.

We believe that educating graduates about managing their financial lives can go a long way to establishing their knowledge of the basics of wealth building. Most of us have never had a class to teach us about the fundamentals required for responsible money management. Topics such as establishing credit, managing cash flow, being disciplined about delaying gratification and building an investment portfolio simply arent covered, even in the best universities. For a good book aimed at closing this education gap, we recommend Why Didnt They Teach Me This in School?: 99 Personal Money Management Principles to Live By by Cari Siegel.

For young women, encourage them to build personal financial strength as a way to ensure flexibility and life choice equal to their male counterparts. Heres where the gift of the book Youre So Money: Live Rich, Even When Youre Not by Farnoosh Torabi can play a role. Torabi is well-known for her role in empowering young women financially and this book is highly rated for its entertaining yet practical advice on personal finance.

With your guidance and these financial tips, your graduate will get off to a positive financial start with the tools to establish healthy lifelong financial habits.

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Photo by Contributed Photo /Times Free Press.

What: Public hearing on high-interest lending practices and research from the Mayors Council for Women

When: Today at 5:30 p.m.

Where: Family Justice Center 5705 Uptain Road

We've heard it our entire lives, the old adage reminding us how important it is to "save for a rainy day." But it's impossible to imagine saving for any type of day rainy, sunny, windy or otherwise if you're just barely getting by. The struggles of poverty are real and, as you might imagine, disproportionately affect women and children.

To have "financial independence" means to be able to at least provide the necessities for yourself and your family. That's a far cry from saving for the future, for retirement, for college, for a vacation or an emergency. But that's the reality facing so many in our community. In fact, 2015 Census data shows 15.9 percent of people in Hamilton County are living in poverty that's more than two points above the national average.

Often times, our most vulnerable citizens use payday lending to make ends meet. If you are familiar with the business model, then you know the traps, pitfalls and predatory practices that encumber far too many lured by the promise of quick, easy money. That money may be quick but it's by no means easy, with interest rates much higher than other types of loans.

Research has shown the damage these types of businesses have on individuals, families and communities as a whole.That's why two years ago, Mayor Andy Berke, Councilman Russell Gilbert and I partnered together on zoning legislation to help stop these businesses from flooding our streets. By clearly stating that no new predatory lending business can be located within a quarter mile of another payday lender or pawn shop or within 500 feet of a residential home, the city took a step in at least stemming the flow predatory lenders. It was a major step, but we have more steps in front of us.

Breaking down the barriers to financial independence starts with education and empowerment. Twelve million Americans use alternative lending institutions, including many people who live right here in Chattanooga. Research paints a stark picture. We know that the most common borrower of a payday loan is female. Payday loans are most often used for recurring, everyday expenses, not unexpected costs or emergencies as you might assume. And perhaps the most jolting statistic? The average borrower racks up eight payday loans per year. That's about one loan every six weeks.

Interest rates for these loans are so high that it burdens Chattanooga families who are already struggling to get by. In some cases, borrowers will always be in debt, never getting to realize financial independence. As far as regulation goes, Tennessee is a permissive state that means payday lending places in Chattanooga can charge initial fees of 15 percent or higher of the borrowed amount.

The Mayor's Council for Women has been analyzing this issue for the past several months, looking at how we can help tear down the barriers that keep our community members from reaching financial freedom. One way we can achieve this is by leveraging existing community resources that teach financial empowerment to Chattanooga workers and encouraging legislation that reduces the amount of predatory lenders, while allowing for traditional lenders to offer loan alternatives.

Reducing payday lending is not meant to limit the choices of citizens and families, but to offer protection and freedom from debt. The issue of high-interest lending practices will be the topic of a public hearing tonight hosted by Mayor Berke and local experts. Participants also will break up into groups to discuss potential solutions.

Tonight is one more step but we need your help. Join the Mayor's Council for Women and get up to date on our policy papers, including the one referenced here. Support existing community resources that empower Chattanoogans. Encourage state legislation to allow loan alternatives. Educate your neighbors, family and friends on payday lending practices to help reduce the number of Chattanoogans using high interest loans. Together, we can take one step after another, building a foundation that can one day help raise up Chattanooga women and their families towards financial independence.

Dr. Carol Berz is a member of the Chattanooga City Council and co-chairwoman of the Mayor's Council for Women.

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Berz: High-interest loans can hamper financial independence - Chattanooga Times Free Press

Area residents can learn about financial independence and high-interest lending practices. (Photo: MGNOnline)

Area residents are invited to attend a public hearing on financial independence and research on high-interest lending practices.

The event is slated for Monday at 5:30 p.m. at the Family Justice Center,5705 Uptain Road, and is hosted by the Mayor's Council for Women.

Attendees will hear from Councilwoman Carol Berz, who co-chairs the council, along with panelists Martina Guilfoil, Tracee Smith, Joda Thongnopnua and Jennifer Harper.They will discuss the impact ofhigh-interestloans and the recommendations of the financial independence workgroup.

Mayor Andy Berke announced the creation of the council during his 2015 State of the City address.

The council addresses issues such as domestic violence, justice, education, health care, economic opportunity, history and leadership.

The city of Chattanooga has adopted three of the councils recommendations, and last year, the Tennessee Legislature passed a bill the council developed. That legislationhelps victims of domestic violence stay in their homes when faced with eviction because of an offenders actions, according to a news release.

Click here for more information.

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Public invited to hearing on financial independence, high-interest lending - Nooga.com

Peter Dunn, Special for USA TODAY 7:02 a.m. ET June 3, 2017

Popular destinations: Harpers Ferry, W.Va., Richmond, Va., Baltimore, Ocean City, Md. Peak delays: 30-85 minutes Worst day/time to leave: Thursday, 3-5 p.m.(Photo: Getty Images/iStockphoto)

Im on the outside now.

But when I was on the inside of the financial planning industry, one particulardynamic made my job unexpectedlyharrowing. And now that Im on the outside, I often talk to financial advisers and other financial professionals who find themselves compromised by the same phenomenon that used to drive me crazy. Its so dangerous and counterproductive that no one benefits from this very common reality clients who dont listen.

The stakes are too high for both you and your adviser to not follow their advice. As a point of distinction, its important you understand Im not necessarily talking about what to invest in, rather how much to invest and how to execute your financial plan in general.

The role of your financial adviser is to listen to your goals, translate them into a financial strategyand then provide you with the steps necessary to achieve them. But this is where the crickets can start chirping.

If you dont execute the plan given to you, then you will fail. At that point, youre the only person to blame. Yet, advisers are often the people with fingers pointed at them and their reputations on the line.

Think how different this is compared to a trip to the dentist.Every single time I go to my dentist, he tells me to floss. Every single time I offer a forced smile and nod. He gives me floss. I take it home, and place it in my floss drawer. I have approximately 500unopened containers of dental floss in my floss drawer. Under no circumstances is he to blame. My dental crimes are my own.

However,with financial advice and financial advisers, theres a lot more at stake than hygiene. If you dontlisten to youradviser, you run the risk of failing at the hardest game in town creating financial independence. This means working longer (if not indefinitely), settling for less, and creating oodles of cripplingfinancial stress.

When your adviser says your goals need $500 per month or $150 per month or $273.76 per month, then send in the money, or change your goals. And if you arent willingtofeed your goals, stop wasting your money on financial advice.

The fact is, clients get distracted by the market and returns, which causes them to ignore their role in fueling the fire.It never ceases to amaze me how much more attention is paid to what to invest in, versus how much money should be invested. The result is every single retirement readiness statistic produced.Im not lamenting your rightto do what you want or don't want to do, if you dont fund your goals properly, you will fail every single time.

I want you to get the most out of your relationship with your financial adviser. Youre paying for it. Just understand, it behooves you to be a good client and follow through on the advice your adviser give you.

I cant imagine a more important professional relationship than the one you have with your financial adviser. If you find yourself a trustworthy adviserandput your faith and energy into the relationship, then you will benefit greatly. If you dont, or you dont put your faith and energy into the relationship, the equation breaks down completely.

You can do yourself a huge favor with your financial adviser by taking them a thorough set of financial goals. Talk through the goalsand then allow the adviser to put a plan in place to help you achieve the goals. If your adviser happens to tell you that one of your goals is a bad goal, dont get offended. Be glad. Save the customer-is-always-right drama. A great adviser will find a way to help you accomplish important goals and delicately dismiss counterproductive goals.

My feeling is that most relationships with financial advisers fail because measurablegoals are neither set nor accomplished. If youre sending your adviser a few hundred dollars per month with no specific goal, then everyone is worse for it. Be sure to put in the leg work from the beginning, by giving both you and your adviser a target to aim for. And above all else, act on your plan.

(Photo: Provided)

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Peter Dunnis an author, speaker and radio host, and he has a free podcast: Million Dollar Plan. Have a question about money for Pete thePlanner? Email him atAskPete@petetheplanner.com.

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Pete the Planner: Dealing with clients who don't listen - USA TODAY

Illustration by Elena Scotti/Lifehacker/GMG

Most people have a hard enough time envisioning retirement at all, much less early retirement. Despite that, many workers have managed to quit their jobs and achieve financial independence by age 40 or even younger. Sipping drinks on the beach all day at the ripe old age of 30 sounds incredible, but theres a downside to it, too.

I first read about the concept of early retirement via the finance blog Mr. Money Mustache. Blogger-turned-personal finance guru Peter Adney managed to retire by the age of 30, crediting his massive savings rate and extreme frugality. He argues that most of us can afford to do the same, but we fail to take control of our situation and too heavily blame outside forces. As someone who writes about both personal finance and the economy, I think thats a simplistic point of view, but it hasnt stopped many others from striving for the same dream, including the semi-anonymous blogger Brian at Done By Forty.

Documenting his own goal to reach retirement by the age of 40, Brian explores the full picture of what early retirement looks like. He told us:

We bloggers who write about early retirement and financial independence do a pretty good job outlining the benefits of those goals: additional time with our friends and family, the freedom to pursue activities without the pressure of needing a paycheck, and the security of having a nest egg that can sustain ones expenses indefinitely. But we do a lousy job seeking out the risks inherent with a huge life change like early retirement.

In a recent post, he breaks down one of those risks: early retirement might dull your brain.

There are actually a handful of studiesmost notably, the Health and Retirement Studythat find a link between cognitive decline and retirement in general. Researchers call it mental retirement, and it may hit harder for younger retirees.

Citing a study published in the Journal of Economic Perspectives, The New York Times reported (emphasis ours):

The researchers find a straight-line relationship between the percentage of people in a country who are working at age 60 to 64 and their performance on memory tests. The longer people in a country keep working, the better, as a group, they do on the tests when they are in their early 60s.

The study used a memory test that asked subjects to remember a series of words, then tested people from different countries, some of which encouraged citizens to retire early. They found that early retirees scored significantly worse than subjects from countries who retired later.

My feeling is that the memory test signals the tip of an iceberg: a small sign of a larger mental decline, Brian writes in his post. Of course, correlation is not necessarily causation, and memory tests are just one way to measure cognition. Other scientists have pointed this out, too. As one researcher told the Times:

Its quite convincing, but its not the complete story. This is an opening shot. But its got to be followed up.

That said, the authors of the Mental Retirement study seem to be pretty convinced that there is indeed a causal relationship. They point to a couple of reasons early retirement might dull our cognition.

This might be a matter of use it or lose it. The earlier you let go of mental stimulation, the worse your cognition gets by the time youre, say, 60 years old. Its easier for us to learn when were younger, so when we opt out of learning, we miss out on the chance to improve cognition down the road. They say if you want to keep your cognitive abilities, like memory, you should stay active.

The very prospect of an early retirement itself may sap the workers motivation, Brian told us. Why take on difficult projects and learn new skills if you are fifty, but are leaving the workforce in five years? In other words, the mental retirement effect may kick in before youve even left your job.

If these studies hold any water, that means that if you retire at 30 or 40, cognitive decline could start even before that.

Ive been thinking a lot differently about my early retirement since writing the post, Brian said. The research seems to point to keeping some sort of work in your early retirement plans, which is ironic and maybe a little sad, too. But the risks of cognitive decline are too great. Without really convincing research on how you can effectively mitigate those risks, the best approach I can think of is to keep some form of work in my life.

As much as we complain about work, it seems theres an upside to it: it can keep us sharp. Of course, the answer isnt that black-and-white, either. Not all work is mentally stimulating, for example. And working until you die just to stay sharp sounds like a pretty depressing solution.

The thing is, this isnt just a problem for early retirees. It might be something that affects all of us. Rachel Wu, a University of California-Riverside psychology professor argues that we all suffer from cognitive decline as adults because of the way we learn.

When were kids, were encouraged to learn broadly: we take on multiple skills at once, were allowed make mistakes, and learning is open-minded. As adults, we switch to specialized learning: were supposed to pick one career, one job role, and if we make mistakes, there are serious consequences, like losing a job.

When you look across the lifespan from infancy, it seems likely that the decline of broad learning has a causal role in cognitive aging. But, if adults were to engage in broad learning...similar to those from early childhood experiences, aging adults could expand cognitive functioning beyond currently known limits, Wu said in a statement.

In other words, she argues that, retirees or not, we can stay sharp by learning multiple skills, getting out of our comfort zone, and embracing mistakes.

Back when I started the blog, my plan was to insert more activity diversity into my life: just to spread my twenty four hours more evenly into the things I like doing. Like board games. Or naps, said Brian. But the more I think about that, the more that seems like a rudderless existence, too focused on leisure and rest. Our plan today is to insert meaningful work into my retirement, irony be damned.

The solution seems to be less about working through retirement and more about making sure youre exposed to stimulating activities when you retire.

If they want to stay sharp, early retirees have to think beyond the traditional sipping drinks on the beach approach to retirement. This is why a lot of early retirees, including Mr. Money Mustache, use the term financially independent instead.

The honest answer is that Im not totally sure what that life will be like yet, Brian said. It turns out that knowing that you dont want to work a traditional job until 65 is not the same as knowing what youd rather do instead.

Excerpt from:

Why Early Retirement Isn't as Awesome as It Sounds - Lifehacker Australia

Learning how to achieve financial independence and retire early (FIRE) is pretty simple in theory. Ive covered some key technical concepts is past articles. These include the math behind building wealth quickly and simple tax planning strategies common in the FIRE community.

While the concepts are simple in theory, they are not always easy in practice. Ive studied early retirees and discovered key strategies and patterns of behavior that separate them from those living a more conventional lifestyle. Continuing that theme, I have identified three actions that have been key in allowing for my own early retirement. Oh, and Im only 41 years old.

The story you tell yourself becomes your reality Chad Kellogg, American alpinist

It is documented that you are more likely to obtain goals when you write them down. I propose you go one step further and write your own story.

In my case, I observed the happiest and most passionate people I knew were my ski bum or dirtbag climbing friends. However, most were living a life of financial risk with little security.

I also observed many on the other side of the spectrum: professional people who had money and prestige. However, they were trading away most of their time working while they still had the health, energy, and vitality to pursue their passions. At the end of the day, few seemed genuinely happy or fulfilled.

The common narrative is that you must choose between a false dichotomy of life focused on career and money or a life focused on things like passion, fulfillment, and family. I wasnt happy with this choice, though. I wrote a simple essay about having the best of both worlds, which I titled Dirtbag Millionaires. Then, I started figuring out how to piece that life together for myself.

This may all sound clich, even a little cheesy. However, if we think about it, someone is writing each of our stories. Its just a matter of who that someone is.

It is important to realize we all have the ability to create our own narrative. And if you want to retire early, writing this story is mandatory.

you should have a running list of three people that youre always watching: someone senior to you that you want to emulate, a peer who you think is better at the job than you are and who you respect, and someone subordinate whos doing the job you didbetter than you did it. Chris Fussell, former US Navy SEAL officer

I recently came across the above quote in Tim Ferriss new book, Tools of Titans. It came in response to the question, How do you define success? Personally, I think this is excellent advice for those looking to do something extraordinary with their lives. Nearly everyone follows the same path: birth, school, work, retire, die. For those of us on a different path, though, it can be challenging to gauge how we are really doing. Having, and watching, these three people in our life gives us a yardstick against which we can compare our progress.

My wife and I worked with a conventional financial advisor for about a decade. He repeatedly told us how well we were doing. Compared to our peers leading a conventional lifestyle, he was right. However, following conventional financial advice meant massive investing and tax planning mistakes. This cost us over $20,000 in excessive fees, unnecessary taxes, and opportunity costs in just our last year of using his services.

About five years ago, Id had enough and took control of my finances. I began reading early retirement blogs like Early Retirement Extreme. Soon after, I moved to Mr. Money Mustache and The Mad Fientist. While each of these blogs was very enlightening and technically helpful, I found that their focus on the fastest and most efficient path to retirement was not consistent with my values.

Related: How to Build Wealth Quickly So You Can Retire Early

I became overly focused on money and retirement. Despite already having a very high savings rate, I began watching every penny we spent. I became excessively focused on regretting past financial mistakes and wanting a future of freedom from work.

For the first time in my life, money became a stressor. While my knowledge and wealth grew, I became less happy.

I needed better benchmarks to compare myself against a way to define our success. So, I began to search for others whose attitudes and values better lined up with my own.

I continued reading early retirement blogs to find others who had already done what I wanted to do. Two that I found extremely helpful were Todd Tresidder at Financial Mentor and Darrow Kirkpatrick at Can I Retire Yet? They demonstrated a more sustainable path to FIRE and were living lives consistent with what I desired in my own retirement.

I then began connecting with peers who had comparable stories and were at similar places on their journey. This included the bloggers behind Our Next Life, who are on our same timeline to retirement and share our passion for the outdoors. I became friends with Chad Carson, who has taken a very different path to FIRE as a real estate investor, but has very similar values, interests, and family situation to my own.

Learn More: How to Make Money Blogging

I also connected with the bloggers behind Slowly Sipping Coffee after reading their description of a fully funded lifestyle change, which was more in line with our values than a traditional retirement. More recently, my wife and I joined a mastermind group of similar couples. Having peers on a similar journey has been very helpful. We are able to share the triumphs and discuss the challenges of this unusual lifestyle.

Finally, I began connecting with those behind me in their journey to FI. This includes Jared Casazza, who writes the blog Fifth Wheel Physical Therapist about his journey from 6 figure debt to FI in 5 years. It also led me to connect with a Dough Roller reader/listener Andrew, who I have been coaching for the past few months.

Helping those behind me has forced me to develop a deeper understanding of our own ideas, theories, and processes. Learning their stories has made me appreciative of how far we have come on our own journey.

the old story was freedom from: freedom from work, freedom from having to get up in the morning, freedom from lots of things. The new story is freedom to. Richard Leider, Author of Life Reimagined

Many people think early retirement is difficult, if not impossible. They think it is too hard to save enough money to support them indefinitely. Following the 4% rule seems like it would be stressful. They do not know how they would ever pay for health insurance. They think they would get bored.

I agree partially (or fully) with all of the above sentiments if retirement is defined in a traditional sense. Worse yet, retirement often deviates from the happy, carefree time so many imagine. In fact, retirement is associated with an increased risk of anxiety and depression! This didnt sound like anything I wanted for myself, so I simply redefined retirement.

I stopped worrying about trying to save every penny, with the idea that retirement meant never again making money. I have accepted that the future is always uncertain, so I focused on building a substantial nest egg while also building great flexibility into my plan. This allowed me to reach a point where earning money will never again be the central focus of my life. Going forward, my life may, at times, look very different. It may look like that of a part-time or seasonal worker, stay-at-home dad, entrepreneur, ski bum, freelancer, student, teacher or any combination of the above.

Related: Is the RAM Better Than the 4% Rule?

Seth Godin has a great quote: Instead of wondering when your next vacation is, maybe you ought to set up a life you dont need to escape from. I chose to apply this idea to retirement planning.

Not needing to make money will give me freedom with my time. Building in a plan to also do some paid work will give me the opportunity to live a lifestyle of abundance, rather than one focused around a strict budget. It will also allow me to continue to build social connections and live a purpose driven life.

There are probably some of you who would criticize this plan as not really retired. However, this definition of retirement is in alignment with the principles of the Life Reimagined program, developed by AARP to address the many challenges and downsides of traditional retirement.

When I started getting serious about early retirement, I became obsessed with the technical how-tos. I needed to plan out where my financial threshold was how much did I need to save now, in order for this flexible plan to really work? While I dont have every step planned out and I dont know exactly what my retirement will look like down the road, I know that I am happy with the freedom and flexibility it provides me. Its important to realize just how possible it is for you to achieve a similar outcome, too.

Write your own story; develop systems to measure your progress, and define what you want for your life. You may be amazed by where you find yourself in just a few short years.

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How I Reached Financial Independence By Age 40 - The Dough Roller

Chattanooga Mayor Andy Berkes Council for Women invites everyone to attend an upcoming public hearing on financial independence to hear the Councils research on the issue of high interest lending practices and to discuss solutions to financial problems impacting the community.

The hearing will be held at the Family Justice Center, 5705 Uptain Road, on Monday at 5:30 p.m.

Financial Independence, a workgroup of the Mayors Council for Women, has completed their most recent policy paper and will be hosting this public hearing to discuss their findings about the impact of high interest lending practices.

Councilwoman Carol Berz, along with panelists Martina Guilfoil, Tracee Smith, Joda Thongnopnua, and Jennifer Harper will discuss the impact of high interest loans and the recommendations of the Financial Independence workgroup.

Mayor Berke announced the creation of the Council for Women during his 2015 State of the City Address. The Council addresses issues such as domestic violence, justice, education, healthcare, economic opportunity, history, and leadership.

The City of Chattanooga has already adopted three of the Councils recommendations, and last year the Tennessee Legislature passed a bill the Council developed. It helps victims of domestic violence stay in their home when faced with eviction because of the offenders actions.

For more info, visit http://connect.chattanooga.gov/councilforwomen/.

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Mayor's Council For Women Invites Public To Financial Independence Hearing On Monday - The Chattanoogan

The most common reason to start investing is to build a nest egg for our retirement days. Believe it or not, the concept of retirement is relatively new. In fact, before the 1900s, Im pretty sure retirement wasnt even a word. Back then, as many people started working and living longer, the idea of having a few years to relax before passing away made sense. In fact, people used to retire because they were not able to work anymore. Governments had the great idea of funding a solution to take care of the elders; they called it a retirement pension. Across many countries, this idea is similar: Once you reach the age of 65, you can stop working and still receive a check to cover your basic needs. At first, It was really to compensate for the gap between the age where you can barely work (65) and the age you should expire (70). Giving everyone a 5-year break after having worked their entire lives makes total sense. However, retirement isnt the same anymore as our life expectancy keeps increasing:

How Retirement Has Evolved Over Years

I think the financial industry had a major role to play in our interpretation of retirement. These companies have found a way to make more money off our backs by creating a whole new marketing concept: enjoying life after work. Instead of having a couple of years to slowly die in our rocking chairs, we are now sold the idea that we could travel across the world, learn new languages, play golf and practice all kinds of other hobbies. After all, we have roughly 20 years in front of us once we retire. The first 10 years tend to be the time when we are still healthy and have enough energy to enjoy retirement. But as with anything else, enjoying has a cost.

So while we work our asses off to pay down our mortgages, student debts and car loans, our dear financial advisor comes to us with this great after life product we can buy. Another payment to be added to our monthly budget. How about $500 bi-weekly set aside for the next 30 years? You could become a millionaire before you retire

So now you are all pumped about this new concept; man, you will finally be free and you could enjoy a 20-year vacation! You are happy now? Then get back to work to finance this new dream!

Financial Freedom, Financial Independence, Early Retirement And So On

At first the idea of retiring and being a millionaire was brought to us as the ultimate mean to our life. You know, the good old go to school, get good grades, get a good job, get a promotion, save like a mad man and live like a king for the last 20 years. The picture of the rocking chair has been replaced by a golf cart or an umbrella by the ocean. For this almost-never-ending vacation, you need to endure your life for a good 30 years and earn it. Some people havent bought this. This is where new concepts of financial freedom, financial independence and early retirement came to life.

What if you can stop working earlier? What if you dont have to wait until the age of 65 to call it a day? Hum, this sounds even better, right? But just like being on vacation for 20 years sounds appealing and comes with a price, retiring earlier also comes with a price tag - and there is no Black Friday deal on it!

Retiring Is A Number Game

Regardless of whether you want to follow the model and retire at 65 or you want to play the rebel and stop working at the age of 45, the idea is the same: You need to find a way to generate enough income to support your lifestyle. As retirement is not a right, but a luxury, some people can afford it more than others. In order to achieve it, you need to play the numbers game.

Lets forget the idea that you could build a multi-million-dollar company and live from this forever. Lets focus of what 90% of the population will do; work until they stop and retire. While it seems quite complicated at first, your retirement plan will be a combination of very few factors:

Other sources of income (rental income, various pensions, sideline, etc.)

The interesting part is that you have a certain level of control over each of them. You obviously have more control on the number of years you save and the amount than you have on your investment return.

Another very important factor is the amount you need to support your lifestyle. For someone interested in living simply without luxurious tastes, a sum of $2,000 per month could be enough. I worked over a decade writing financial plans for my clients, and the income someone needs to retire with is quite different from one individual to another. Some need $2,000/month and others would need easily $8,000 to enjoy retirement.

In the next article, we will go deeper into the amount you need to retire comfortably. We will run some calculations and see how we can come up with a solid plan. In the meantime, Id be curious to know how much you think you need to retire?

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A Friendly Guide To Retirement Part 1: What Is Retirement Anyways? - Seeking Alpha