By |2019-01-30T13:53:46-05:00November 16th, 2018|Blog|

“There is simply nothing that galvanizes people, and blasts them suddenly out of keeping up with the Joneses and into actively worrying about retirement – as does The Big Five-O.”

– Nick Murray

It seems that when we wake up on our 50th birthday, we experience a unique realization that it is time to shift from “keeping up with the Joneses” to actively thinking about the next stage of life and retirement.

By that age, we have likely been working very hard to develop our professional careers for 25 years or so. We have likely accumulated some financial wealth and are in our peak earning years. Our kids are growing older, and if they are not already in college, they are headed there soon, and the idea of becoming an empty nester is starting to come to life. We start thinking about financial freedom and what we’ll do as we take a step back from work – travel, play golf, read a book, spend more time with family, etc.

We can see the future, and we start to realize that it is getting a lot closer. In short, at age 50, we find ourselves in the “Retirement Red Zone,” where three revelations often take place:

  1. Over the next five or ten years, we need to accumulate some serious financial assets in our retirement portfolios to achieve financial independence.
  2. We are probably behind when it comes to building the kind of wealth we need to achieve financial freedom.
  3. We have spent the last 20 years working hard to earn a living but almost no time planning and organizing our financial lives. Although we have accumulated some wealth in a “collection” of 401(k)s, mutual funds, brokerage accounts, 529 plans, and annuities and insurance policies, we have no real plan – certainly not in writing. Time is running out.

In short, we are very suddenly facing some very important facts about our financial futures, and we need to make some important decisions.

Facts and Decisions

The fact is that at some point in the next ten to 15 years, we hope to retire or semi-retire. At that time, we will be facing one of two possible long-term outcomes. The first possible outcome is that our money will outlive us, in which case we will experience the joy of knowing that we will preserve the two most important qualities of life we all seek: our dignity and independence. The second possible outcome is that we will outlive our money, in which case we are bound to experience the misery of the slow but inevitable death of all dignity and all independence.

So, we have to decide if we will commit to a plan to achieve the outcome we want. While it is true that commitment to a written, date-specific, and dollar-specific financial plan does not guarantee that we will achieve the first outcome, the absence of such a plan all but guarantees the second outcome. The good news? It’s okay if we don’t have a written plan now. Almost nobody does at 50. There is still time, but we better get to work.

Sound Familiar?

Here’s a story about a nice young couple, Jim and Kristy. Jim and Kristy worked very hard for many years to earn a good living and raise a family. However, by the time they hit their 50th birthdays, their retirement dreams seemed to be a million miles away. When it came to their money, they were confused and disorganized, and they felt that they not only didn’t have all the answers they needed, but they also didn’t even know the right questions to ask.

Jim and Kristy had never really sat down together and agreed on their most important long-term financial goals, calculated how much money they would need to accumulate, and agreed on what they were willing to save to reach those goals. They had no household budget, and they were not on the same page with respect to their household spending and savings decisions. They had a disorganized “collection” of financial products they had purchased over time, but no organized theme to their investment and insurance strategy. They had a portfolio, but not a plan. They knew they needed help, so they asked around for a referral to a good financial advisor and received one from their CPA.

Jim and Kristy met with their new advisor, Tom, and had a deep conversation about what was most important to them and what they hoped and dreamed they might accomplish financially. They listened to each other’s perspectives about their future goals and got on the same page about what they wanted to accomplish and what they were willing to do to accomplish it. They developed a shared understanding of the importance of making a commitment to a process of planning for their future.

Next, Tom helped Jim and Kristy to organize and simplify their current finances so that they could finally see the whole picture and how everything they own fits together. Then they designed a date-specific, dollar-specific plan for achieving their key financial objectives, and they put it in writing. They made sure to build their plan on assumptions for the inevitable occurrence of market volatility that they knew would happen, and they educated themselves about the historical impact of stock market volatility to prevent the emotional roller coaster of the stock market from throwing their plan off course.

Most importantly, they committed to each other that they would maintain the discipline to execute their plan, and they agreed to listen to Tom as their “Accountability Coach” to help them maintain that discipline. They locked in a recurring schedule of review meetings to evaluate their progress against their plan, discuss necessary course corrections to make, and execute actions to maximize the efficiency of their financial management.

Jim and Kristy now feel confident and excited about their future. They are right on track with their plan, and they don’t worry about their financial future anymore.

This story may sound like a fairy-tale, but people like Jim and Kristy meet great financial advisors like Tom every day. This is what a qualified and competent financial advisor can do for you and your family, and it is a priceless service. If you are 50 or older and don’t have a relationship like this run, don’t walk, to the office of the best financial advisor you can find and learn how you can build a plan like this too.

By |2019-01-30T13:53:46-05:00November 16th, 2018|Blog|

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