The only Way to achieve your financial goal(s) is through a financial plan personalized just for you.
This is how I look at a financial plan: take all you have saved and invested at today’s dollar and growth based on the return you are currently getting to project the total accumulated balance. This “ending” balance should sustain you through your lifetime including retirement.
Let’s look at a couple of real-life examples.
Example 1: A 45-year old couple, Josh and Ann, saved $500,000 in their retirement accounts and plan to both retire at age 65. Their current rate of returns on average is 8% per year. Their annual spending is $150,000. Their combined annual income is $200,000.
Example 2: A 65-year old couple, Mike and Lauren, also saved $500,000 in their retirement accounts and just retired in 2020. Their current rate of returns on average is 5% per year. Their annual spending is $100,000. The combined annual social security income is $60,000.
Let’s see if they make no changes and follow their plans, whether their income could sustain them through their lifetime. Our goal is to ensure both couples can live the lives they want to have, (by their definition) through the projected life expectancy of age 100.
We can’t tell. How would anyone know with certainty that they will, or will not run out of money? Pray and hope is not the answer.
To make sure they won’t run out of money, could I possibly help them get better returns and accumulate more? Could I possibly help them invest in less risky investments and achieve the same level of returns?
To ensure their funds will be adequate, could I possibly re-align the investments to help get better returns? Or should they look for other sources of income? Spend less? Delay retirement age? Get part-time jobs in retirement? Stay with their adult children?
The earlier you start to plan the better is your chance to accomplish your goal(s). More money could have been made and you have lost time. True, things don’t always turn out as we plan but failing to plan is planning to fail.
It is your life, your money, your decision.
As a financial advisor, I want to spend my time wisely helping families take their finances seriously. From a professional perspective, doing a financial plan is a given, a benchmark for us to keep track of the progress, and the only way for me to help my clients, to work side by side meaningfully and productively.
If you were building a house, wouldn’t you hire an architect to draw the blueprints to see what the house will look like? And how could you budget the money needed and still pick out the materials you prefer? Don’t you think your retirement is more important than your house?
How could you decide whether your Body Mass Index (BMI) is good if you don’t have your height and weight measured? How could your primary physician assess your wellness if she/ he doesn’t have your age, blood test, etc.?
To have a personalized financial plan completed before I construct a portfolio for clients is a prerequisite for me to take on a new client. If we are to work together for you and your loved ones’ finances, we are going to do it “your way” – based on your unique financial plan.
When you are ready, I am here to assist you and your family.
p.s. I am dedicating this article to Mr. Nick Murray whose experience and knowledge has helped me realize the passion in me to be a financial advisor and the right way of building my practice.