Many of you will read the title of this article and wonder what it means. President Abraham Lincoln once said, “The best way to predict the future is to create it.” One of the roles I relish, when working with our clients, is the ability to help people reach their goals in life. Often clients will look at me during the planning process and possess only two items of information: 1) where she currently resides financially; and 2) where she wishes to be at retirement. The chasm between these two points of life may seem bottomless and unreachable. Before you shake your head that you agree with the previous statement, let me share a proven method of predicting your future.
First, you must clearly define your desires for your future. It is often said that “no archer can hit a target that doesn’t exist.” The process of future design begins with your imagination. Do you wish to relocate in retirement? Do you dream of a second career? What about your volunteerism you wish to enhance during retirement? Will you need specialty medical assistance and support in retirement? What type of home do you wish to reside in retirement? There are many considerations and you should list all of them that you wish. There are no wrong answers!
A plain piece of paper and your favorite writing instrument will open your mind to the world you want to develop. Once the list is completed, for now, you should breathe a sigh of relief. You have now performed more planning for your future than most people. More time is spent by individuals planning their vacation than planning their future!
Second, you should evaluate your current financial statement. What have you saved for the future? Do you possess an emergency fund? One of the quantitative misunderstandings by most people is that your life in retirement will cost you less than your current lifestyle when working. This is not necessarily true. Think about it. Your medical costs may rise due to age or you may locate where you wish to spend most of your day in your hobby. These types of activities require funds and it is a fact that most retired individuals will continue to require 90% – 95% of their currently living expense in retirement.
When planning for our clients’ future, we assume the same lifestyle in retirement as experienced in their career. Why? It is better to assume more income is required and save more than enough for a lifetime than to be deficient. No one wants to simply exist in their retirement. Therefore, it is critical that a projection assuming taxes, cost of living increases, medical needs, housing costs, etc. be developed into your plan for the future. Success in retirement depends on the ability to weather any financial storm that may arise.
Lastly, you must bridge the chasm with an active savings plan that allows you to maximize growth for the future. Time is your friend when investing. Start early and be consistent in the savings process. If you are starting a little later than intended to save for retirement, there is hope for you. With a proper review of your current circumstances, you can make strategic changes in your savings plan that will give you the most probable opportunity for success. As retirement planning specialists, we have witnessed the fear people experience when the vision for the future is not clear.
Seek out a complimentary consultation to see if you qualify for a “second opinion” of your plan for retirement. If you don’t have a plan, lets get one started. Live for today but plan for your future. Might as well, that’s where you will be spending your time in retirement. See you on the walking trail!