Financial Independence Planning
Financial Independence Planning: A Strategy Guide
Financial independence is not a single number or a fixed retirement age. It is the point at which your assets, income sources, and strategy give you the flexibility to make life decisions on your terms. This guide covers the key planning dimensions every professional and executive should address to build that kind of freedom with confidence.
Redefining the Goal
What Financial Independence Actually Means
The popular FIRE movement has shaped how many people think about financial independence: pursue an extreme savings rate, hit a fixed multiple of annual expenses, and stop working as early as possible. For some, that framework is motivating. For many professionals, executives, and business owners, it misses the point entirely.
Financial independence, as we define it at New Horizons Boutique Financial Services, is about creating flexibility, security, and future opportunity. That means building a financial position that allows you to choose how you spend your time — whether that is stepping back from a corporate career at 52, transitioning a business at 60, working part-time on projects you care about, or simply never worrying about a market downturn again.
The right definition of financial independence is yours to set. The job of a well-built strategy is to tell you exactly where you stand against it and what needs to change. You can view our full range of financial planning services to understand how each area connects to your independence goals.
Three Pillars of Independence
Flexibility
The financial capacity to make major life decisions without being constrained by a paycheck, a business, or market timing.
Security
Income sources and reserves designed to sustain your lifestyle through market volatility, unexpected expenses, and longevity risk.
Future Opportunity
Preserving optionality to pursue new ventures, give generously, support family, or simply grow wealth beyond what you need.
Case Study in Action
Are You Ready? Assessing Independence at Age 56
For many professionals, the mid-50s represent a critical window. You are likely at peak earning potential, your children may be transitioning into independence, and the question of whether you can afford to step back is no longer a distant thought — it is a near-term strategic decision.
In this educational video case study, we analyze a hypothetical 56-year-old couple asking the ultimate question: Are we truly financially independent? We walk through the exact frameworks we use to stress-test their numbers, model their income sources, and identify the blind spots that often go unnoticed in standard, templated plans.
Disclaimer: This illustrative video case study is for educational and general informational planning purposes only. It does not analyze specific client results, and individual outcomes vary based on personal circumstances, tax laws, and market conditions.
The Planning Framework
The Four Dimensions of a Financial Independence Strategy
A meaningful financial independence plan addresses four interconnected areas. Each one affects the others, which is why they must be built as a coordinated strategy rather than a set of isolated decisions.
Identifying Your Independence Number
Your independence number is not simply 25 times your annual expenses. It is a personalized calculation that accounts for your target lifestyle, expected income sources (including Social Security, pensions, or business proceeds), healthcare costs, inflation assumptions, and the length of time your assets need to last.
Getting this number right requires modeling your actual balance sheet, not a generic formula. The goal is a clear, confident answer to the question: "Am I there yet, and if not, how far do I have to go?"
Stress-Testing Your Income Sources
A plan that only works under ideal conditions is not truly a plan. Stress-testing evaluates how your income picture holds up under adverse scenarios: a significant market drawdown early in retirement, a major healthcare event, a delayed Social Security claiming decision, or a liquidity crunch following a business sale.
This analysis helps you understand which income sources are reliable, which are variable, and where gaps may exist that need to be addressed before you step away from earned income.
Building Tax Efficiency Into the Strategy
Tax exposure does not automatically shrink when you stop working. For many executives and business owners, it shifts in form. How and when you draw from different account types, whether Roth conversions make sense in your pre-retirement window, and how capital gains are managed across a transition all affect how much of your wealth you actually keep.
Tax optimization planning is most effective when coordinated with the rest of your independence strategy, not treated as a year-end afterthought. Results vary by individual situation and may involve trade-offs depending on your income, account types, and timeline.
Building a Strategy That Adapts Over Time
Financial independence is not a one-time calculation. It is a living strategy that evolves as your income, life circumstances, tax laws, and goals change. A strong plan is reviewed and recalibrated regularly so that what was true at 48 stays accurate at 56 and beyond.
At New Horizons, every client relationship includes quarterly reviews designed to measure progress, revisit assumptions, and adjust the plan as life unfolds. Your strategy should work as hard as you have.
Who We Work With
Financial Independence Planning Is Not One-Size-Fits-All
The executives, professionals, and business owners we serve at New Horizons each arrive at financial independence planning from a different place. What they share is a desire for a clear picture and a strategy that is truly built around them.
Executives Nearing a Transition
You have spent decades building wealth through compensation, benefits, and deferred income. The question is no longer whether you have enough — it may be whether you truly understand what "enough" means for your next chapter and how to access it tax-efficiently.
Professionals Seeking Clarity
You know you are building toward something, but you are not certain whether your current trajectory gets you there. A financial independence plan replaces uncertainty with a clear map: where you stand today, what the gaps are, and what actions move the needle most.
Business Owners Planning an Exit
A business sale or ownership transition can be the defining liquidity event of a lifetime. Exit planning ensures that event is structured to support your life after the business, not just the transaction itself. Pre-exit strategy, tax positioning, and post-sale income design all matter.
Our Approach
"Every recommendation begins with a clear strategy. No products are introduced until the full picture is understood."
New Horizons Boutique Financial Services, Lake Elmo, MN
Why It Matters
Strategy Before Products. Always.
Many financial planning conversations start with a product recommendation: an annuity, a managed account, a whole life policy. At New Horizons, that sequence is reversed. A financial independence strategy must be built and understood before any specific tool or product is introduced.
That means building a complete picture across your investments, taxes, income sources, cash flow, debt, insurance, and estate considerations first. Only then do specific recommendations follow, and only when they genuinely serve the strategy.
Because we intentionally limit the number of client relationships we carry, every plan receives the full time and attention it deserves. There are no templates. Every financial independence strategy is built from scratch around your actual situation and goals. View our Financial Independence Planning service to learn more about what that looks like in practice.
Connected Planning Areas
Financial Independence Planning Connects to Everything
True independence is not built in a single account or solved with a single decision. It emerges from a coordinated strategy across retirement income, tax optimization, and — for business owners — the exit planning process. Each area strengthens the other.
Retirement Strategy
Financial independence planning and retirement strategy are deeply linked. Identifying your independence number, sequencing income sources, and managing distribution risk all connect to the retirement planning framework. A well-built retirement strategy lays the structural foundation for sustainable independence.
Retirement strategy is a core service area at New Horizons.
Tax Optimization Planning
Tax optimization strategies — including tax-aware account sequencing, Roth conversion planning, and capital gains management — may help reduce unnecessary tax exposure when coordinated with your independence timeline. Results depend on individual circumstances.
Tax optimization planning is a core service area at New Horizons. Verify our registration on FINRA BrokerCheck.
Business Owner Exit Planning
For business owners, the path to financial independence often runs directly through an exit event. Exit planning ensures the transition is structured to maximize after-tax proceeds, fund a lifetime of independence, and minimize the risk of arriving at the other side of a sale without a clear income strategy.
Business owner exit planning is a core service area at New Horizons.
The Advisory Relationship
A Plan That Evolves with You
Financial independence planning is not a one-time engagement. Life changes. Markets move. Tax laws shift. The assumptions that were accurate when your plan was built may need to be revisited a year later. That is why every New Horizons client relationship is built around ongoing quarterly reviews.
These are not check-in calls. They are structured strategy sessions designed to measure where you are against your independence benchmarks, identify what has changed, and adjust the plan accordingly. You are never left holding a static document in a dynamic world.
Quarterly Strategy Reviews
Progress measured against your independence benchmarks, with adjustments made as income, expenses, and goals evolve.
Direct Advisor Access
You work directly with your advisor, not a rotating team of associates. Questions are answered by the person who knows your plan.
Coordinated Across All Areas
Investments, taxes, income, insurance, and estate considerations are reviewed together — because decisions in one area affect all the others.
Boutique by Design
We intentionally limit our client count so that every relationship receives the full time and attention needed to deliver on this standard.
Common Questions
Frequently Asked Questions About Financial Independence Planning
What is financial independence planning?
Financial independence planning is the process of building a coordinated strategy that gives you the flexibility, security, and opportunity to make life decisions without relying on earned income. It typically includes identifying your independence number, stress-testing income sources, designing a tax-efficient distribution strategy, and establishing a plan that adapts as your goals and circumstances change. It is distinct from traditional retirement planning in that it focuses on reaching a point of optionality, which may happen well before a conventional retirement age.
What is the $1,000 a month rule for retirement?
The $1,000 a month rule is a planning approximation suggesting you may need approximately $240,000 in savings for every $1,000 per month of retirement income you want to generate, based on a roughly 5% annual withdrawal assumption. For example, generating $5,000 per month from savings implies accumulating around $1.2 million. This is a general benchmark, not a projection — actual results depend on investment returns, inflation, longevity, and your tax situation. In Minnesota, state income taxes on withdrawals can reduce net monthly income, which may require a higher gross savings target to achieve the same after-tax result.
How much do I need to retire on $80,000 a year at 60?
To generate approximately $80,000 per year starting at age 60, a common planning starting point is accumulating roughly $1.6 million to $2 million in invested assets — though the actual amount depends on expected investment performance, inflation, Social Security timing, and how long your assets need to last. Retiring at 60 introduces specific challenges: Social Security is not available until at least age 62 (and claiming early permanently reduces benefits), Medicare coverage does not begin until 65, and all pre-tax account withdrawals are subject to ordinary income tax during this bridge period. These factors increase the assets needed to sustain $80,000 per year on an after-tax basis. A detailed projection with a qualified financial advisor is the most reliable path to a number specific to your situation.
Is financial independence planning only for people who want to retire early?
No. Financial independence planning is valuable for anyone who wants to understand where they stand financially and what options are available to them. Many clients are executives in their 40s and 50s who are not looking to stop working immediately, but want to know they could. Others are business owners approaching a sale who need a clear post-exit income strategy. The common thread is a desire for clarity, optionality, and a strategy built to support decisions on their own terms.
What are the biggest retirement regrets?
The most commonly cited retirement regrets include: claiming Social Security too early without modeling the lifetime trade-off; underestimating healthcare costs, especially in the gap between early retirement and Medicare eligibility at 65; failing to account for state income taxes on retirement income; drawing down accounts in an unplanned sequence that accelerates tax exposure; not revisiting the plan after major life changes; and retiring without a written income strategy — relying on a savings balance rather than a structured plan. Most of these are avoidable with a comprehensive financial independence strategy built before the transition, not after. See our services to understand how we help clients address each of these areas proactively.
How does tax planning connect to financial independence?
Tax efficiency is one of the most significant and frequently underestimated levers in a financial independence strategy. The order in which you draw from different account types, whether a Roth conversion strategy makes sense in your pre-independence window, and how investment gains are managed can all meaningfully affect how much of your accumulated wealth you actually keep. Tax optimization planning is most effective when built into your independence strategy from the beginning, rather than addressed reactively each year. Individual results vary based on tax situation and account structure.
What does a financial advisor charge for financial independence planning?
Fee structures vary widely among financial advisors. Common models include flat planning fees, ongoing assets under management fees, and hybrid arrangements. We encourage you to ask any advisor you consider how they are compensated and whether their fee structure aligns with your interests. At New Horizons, we are happy to discuss how we work and what an engagement looks like in a no-cost, no-pressure initial conversation. Schedule a consultation to start that dialogue.
Take the First Step
Find Out Where You Stand. Build a Strategy That Gets You There.
Your first conversation with New Horizons Boutique Financial Services costs nothing and carries no obligation. We will listen to where you are, what you are building toward, and whether our approach is the right fit. No templates. No pressure. Just clarity.
Serving executives, professionals, and business owners in Lake Elmo, Afton, Bayport, Arden Hills, Apple Valley, Anoka, and throughout the Twin Cities metro.