Do you remember the TV show “Fantasy Island” where the character Tattoo stood in the tower waiting for sight of the plane? When he saw the plane with its passengers, he would ring the bell and shout De Plane, De Plane before running down the steps to greet the visitors to the island. This is not Fantasy Island, but it is time to talk about De Plan, De Plan, De Plan! Let us imagine for a moment your golden years known as retirement. You have worked hard for 20 – 40 years and you have reached the point of cashing in your chips. It is time to roll the dice and push it all in! Close your eyes and imagine this point in your life. What does it look like for you?
Are you sitting poolside, sipping pina coladas? Are you crisscrossing the country from Maine to Miami or Los Angeles or globetrotting between Kenya, France, or Mexico? Maybe, you are sitting on the docks of the bay watching the tides roll away or you simply have enough money to fully retire without a part-time gig.
Well, you can achieve whatever you imagine for your retirement years with a well-written financial plan. A plan that is more than a budget or reducing debt; rather a roadmap that will bring your vision to reality by incorporating all the financial concepts around budgeting, saving, paying off debt, and investing. A plan that is undergirded with adequate insurance protection and using tools and strategies to navigate from Point A to Point B. Do you know that with the right strategies, you would be able to tackle life’s challenges, cross bridges, ride through tunnels, climb mountains, and descend into valleys with ease? We know that marriage, childbirth, divorce, job loss, sickness, and death can wreak havoc in one’s life, but your plan can ease your pain and increase your joy.
You could sit down with a Financial Planner/Coach or maybe you are a DIYer. The most important step is to put pen to paper and write what you want, how you plan to get it, and the time you want to accomplish it. This step removes it from head space to a place in which you can read and visualize it. It becomes real and begins to have a life of its own.
Once you have clarity, 20/20 vision, for the kind of life that you want to create, then it is time to set goals. Setting financial goals is an important step toward becoming financially secure. Keep in your mind that goals should be S.M.A.R.T. In essence, we want to make smart money moves regarding how we spend and manage our money. Make those goals Specific, Measurable, Attainable, Realistic or Relevant, and Time-bound. Simply writing “I want to save a lot of money” is not a goal. The smart way to write it is “I want to save $100 per month for the next 12 months”.
While there are other goals to consider such as become debt free, improve credit score, pay off student loans, save for college education, etc. based on one’s desires, these three goals are at the top of my list when I am working with my clients.
- adequate insurance protection (life, long term care, and medical)
- an emergency account
- a retirement plan
Let us examine each one. Having proper and adequate insurance protection is the primary building block of financial planning. The most well-written plan would go up in smoke if you do not have insurance against loss of income or a long-term medical crisis. As we begin to live longer due to medical research and technology, more than 70% of individuals would need long term care services or support at some point in their lives. It is known that most long-term care support and services are provided by family members due to the lack of long-term care insurance. However, families are getting smaller due to lower birth rates, divorces, and geographic locations. Are you planning to depend on a family member to take on this burden financially, emotionally, and physically? I suggest that you add long term care insurance as a part of your financial plan.
The second goal is to establish an emergency account with at least $1000 as quickly as possible. This could be done with tax refunds, work bonuses, or birthday money. This helps to avoid creditors, fees, and high interest rates in the short term. I like to call it a “suddenly” account to help cover unexpected, sudden expenses such as car repairs or a job loss. We can avoid the booby traps with saving six to nine months of expenses. As Capital One would say, “What do you have in your wallet?”
The third goal is to participate in a retirement account program through an employer (401K, 403B, TSP, etc.) and/or open an individual retirement account known as a traditional IRA or a Roth IRA. Contributing to your retirement plan the amount that your employer is willing to match at 100% is like receiving a 100% return or doubling your money. Who does not like doubling down on their money and bagging it? Magic happens when your contributions collide with compound interest. It is explosive growth over time! Have you ever heard of compound interest and the Rule of 72? Let me just say I agree with Albert Einstein who is believed to have said, “There is no force in the universe more powerful than compound interest”.
It is no secret that besides goal setting, financial planning requires time, the identification and understanding of all steps and resources, the analysis of options, and finally, the implementation and monitoring of the plan. It is a highly creative way to design one’s life to enjoy its fullness with family and friends throughout the remaining years with fluidity, flexibility, and resiliency.
Would you like to begin the steps to create your financial plan? It begins with this smart money move: schedule an appointment at daly.cynthia@canfinancial.biz or www.canfinancial.biz to receive a complimentary financial needs analysis. Let us help you today to create your plan for fulfilling and prosperous tomorrows.