Wealth Planning in the Maturing Years2022-11-30T14:13:35-05:00

Wealth Planning in the Maturing Years

“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

The Maturing Years

Here’s an  interesting  model  to describe the basic math about modern lives. Let’s assume that an American is  now likely to live well into their 80s. This person’s life can be divided into four segments, averaging approximately 8,000 days, or 22 years, each. Your first 22 years of life are spent Learning, primarily attending school. You graduate from college when you are right around 22, and you enter a period when you are Growing. Perhaps you get married, and take on a first job, you buy your first home and start raising young children. Then right around  the  time  you  hit  44  or  so,  you  reach  a  period  we traditionally call “Middle Age”, when you are Maturing: your kids are getting older, and probably heading off to college. Your professional capabilities are  really  growing,  as  are  your  financial  responsibilities. Finally, right  around  age  66  comes  a  time  we  traditionally  call “Retirement”.

Each of these phases of life present their own unique challenges and opportunities.  While the challenges and opportunities faced in the 1st half of life revolve more about becoming educated, finding a mate and raising children, in the 2nd half of life things become more complex, and effective financial management becomes an integral part of our success.

Between age  44-66,  we  are  hitting  our  stride  professionally  and experiencing our peak earning years. That is a good thing, because our lifestyle is also becoming more expensive. We may now be paying for college for our children, or even supporting our own aging parents. We buy a nicer car, a bigger house, and perhaps a vacation home. We may even  welcome  grandchildren.  These are  busy  years  in  which  our responsibilities are at a peak.  However we also see the light at the end of the tunnel, and know it is time to prepare for a life of greater freedom of time and money.  It is time to get serious about our financial management

The Magic of your 50’s

In our experience, we have noticed a unique set of circumstances which occur in people’s lives for the decade or so after they hit age 50 – we call it the “Magic of Age 50”.

When you wake up on the morning of your 50th birthday, you experience a unique realization that hits you like a sudden bolt of lightning: it is time to shift your focus from “Keeping up with the Jonses”, to actively thinking about the next stage of your life when you can achieve financial freedom, slow down your work schedule, and possibly retire or at least semi-retire.

By now you have been working very hard to develop your professional career for 25 years or so, and  achieved some success.  You have accumulated some financial wealth, and you are now in your peak earning years.  Your 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.  

You are starting to ponder a lifestyle in which you hope to have the financial freedom to work less and do more of the things you want to do – travel, play golf, read a book, or spend more time relaxing with your spouse.  You may even have thought about what it would be like to retire altogether.  

You can see the vision of that relaxed and “low stress” lifestyle you desire, and you start to realize that it is getting a lot closer than you thought – you only have 10 or 15 years to get ready.  In short, you have found yourself in the “Retirement Red Zone”, subject to the golden trifecta of issues which will be critical to your success in the next stage of your life:

  • Over the next 5 or 10 years, you need to accumulate some serious financial assets in your retirement portfolio if you hope to achieve your goal of financial independence.  This may well be the most money you have ever accumulated in your life.
  • You know you are probably behind the 8-Ball when it comes to building the kind of wealth you will need to achieve financial freedom.  In fact, you may not even be able to see where the ball is right now.
  • You have spent all your time in the last 20 years working hard to earn a living, but almost no time planning and organizing your financial life. Although you have accumulated some wealth in a “collection” of 401(k)’s, mutual funds, brokerage accounts, 529 plans, annuities and insurance policies, you have no real plan – certainly not in writing – and you need to get one quickly.  Time is running out. 

In short, the morning of your 50th birthday you will find yourself very suddenly facing some very important facts about your financial future, and the need to make some important decisions about the next 10 or 15 years of your life.  

Facts and Decisions

The facts are that at some point in the next 10 to 15 years you hope to retire or semi-retire.  When you do retire, you will be facing one of 2 possible long-term outcomes.  The first possible outcome is that your money will outlive you, in which case you will experience the joy of knowing that you will preserve the two most important qualities of life we all seek:  Your dignity and your independence.  You will also have the freedom to intervene meaningfully in the lives of the people you love, your children and grandchildren, and to leave a legacy to a much loved school or charitable institution if you wish.  The second possible outcome is that you will outlive your money, in which case you are bound to experience the misery of the slow but inevitable death of all dignity and all independence. 

The decisions to make have to do with whether or not you will commit to make a plan to achieve the outcome you want.  While it is true that your commitment to a written, date-specific, and dollar-specific financial plan does not guarantee that you will achieve the first outcome, the absence of such a plan all but guarantees the second outcome.

The good news?  It is O.K. that you don’t have such a written plan now.  ALMOST NOBODY DOES.  There is still time, but you better get to work.  

Sound Familiar? 

Here’s a fairly tale about a nice young couple named 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 for them.  When it came to their money, they were confused and disorganized, and felt that they not only didn’t have all the answers they needed, they didn’t even know the right questions to ask.  

They had worked with their “stockbroker” on building an investment portfolio over the years, but they had never really worked with her to design an actual financial plan. 

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 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.  

In short, Jim and Kristy had spent the last 20 years of their lives working hard to make a living and raise their kids, but they hadn’t spent much time thinking about the future, and planning their financial lives. They knew they needed help, so they asked around for a referral to a good financial advisor, and were referred to us by their CPA.  

Jim and Kristy met with our team, and we had a deep conversation about what was most important to them both, and what they most 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, if they ever hoped to achieve the life of financial freedom they so desired. 

Next, our team 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 put it in writing. They made sure to build their plan on assumptions for the inevitable occurrence of market volatility which they knew would happen, and educated themselves about the historical impact of stock market volatility, so they wouldn’t let the emotional roller coaster of the stock market throw their plan off course.  

Most importantly, they committed to each other that they would maintain the discipline to execute their plan, and agreed to listen to us as their “Accountability Coach” to help them maintain that discipline, so they won’t wander off of the plan.  They locked in a recurring schedule of review meetings, to meet every quarter and evaluate their progress against their plan, discuss necessary course corrections to make, and execute actions necessary to maximize the efficiency of their financial management.   

Jim and Kristy now feel confidence and excitement about their future, and no longer feel confused and overwhelmed.  They are right on track with their plan, and they are extremely confident that they will be financially free – they don’t worry about their financial future any more, because they have a specific written path to achieve their most cherished goals.  

This story may sound like a fairy tale, but people like Jim and Kristy meet great financial advisors like our team at Concentus 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 find out how you can build a plan like this too.

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