The prospect of retirement looms large as you approach and pass 60, but why wait a few more years to call it quits on the working world? The dream of achieving financial independence can seem a lifetime away for most, but you may already have much of what you need to realise it in your 60s.
In this article, we’ll discuss financial freedom and how you can go about achieving it if you’re already in later life.
What is financial freedom?
Financial freedom, often referred to as financial independence, is all about affording the lifestyle you want without having to work in the traditional sense.
Relying on investments, savings and passive income streams, you can leave employment behind and embark on a new journey of stability and fulfilment while enjoying your true passions. Whether you want to travel, throw everything into hobbies or just relax, financial independence gives you the freedom to do this.
Many people plan for financial freedom for decades .But if you’re just getting around to the idea now in your 60s, you may need to take more drastic action to achieve it. Here’s what you should consider.
Lifestyle adjustments for financial wellbeing
Financial freedom usually relies on you being debt-free and earning enough to cover your living costs. If you’ve already paid off your mortgage, great! If not, you may want to consider downsizing to live mortgage-free or lower your monthly expenditure.
Living a simple life without many of the extravagances associated with frivolous spending may also help you to achieve financial freedom sooner. The less you spend each month, the less you need to earn from your investments or use from your savings, and the faster you can effectively retire.
Retirement savings and investments
Many people achieve financial freedom by relying on the earnings from retirement savings and investments as they grow over time – this is taking advantage of something called compound interest.
The longer you have to develop these the better, but if you’re only getting started in your 60s, you may need to be more creative with your approaches.
Options such as equity release can free up cash from your house to invest in your future. Investments are useful in combatting inflation, effectively sustaining and even growing the value of your cash until you need it. Keeping cash in savings accounts won’t generate returns on investments as quickly, so you may effectively lose money over the years as things become more expensive.
Passive income streams in later life
If you haven’t had decades to build your investment portfolio or retirement savings, passive income sources are probably your best chance of gaining financial freedom. Passive income is money earned without having to work in the traditional sense. For example, rental income from buy-to-let properties or dividends from stocks and shares.
Finding opportunities to generate passive income is invaluable to reduce your reliance on employment and give you the funds needed to facilitate your retirement lifestyle. If you want to travel the world or give back to others, you may need more passive income than others.