More than Numbers -
Financial Planning has traditionally been about numbers. How much do I need to save? How many years before I can retire? How long will my money last? And yes, crunching numbers is one part of the financial planning equation. But there’s more to it than that. Some say that financial success is 80% behavior and just 20% numbers.
Go back in time for a moment. Imagine yourself back at your very first job; you’re sitting in the conference room listening to the company’s 401k provider talk about the retirement plan. He says, “If you’re 25 years-old and save about $300 each month, then you’ll likely have $1 million when you’re ready to retire at age 65.” Admittedly, that’s an impressive number. But how many 25 year-olds actually have the discipline to set that money aside month after month? Not too many. Why? Because retirement is a long way away and that shiny new car sure looks nice today. Or because the latest iPad is a must-have. Or because that trip to the Bahamas is too tempting. There are hundreds of reasons why.
If you’ve ever struggled with setting money aside for retirement, perhaps it’s because your vision for the future isn’t clear enough. A clear vision is motivating and motivation energizes, directs and sustains behavior; it gets us moving, points us in a specific direction, and keeps us going forward. Having a vision for the future and planning for that vision are as important as money in achieving long-term financial success.
Your Dream Retirement?
So, what do retired people do anyway? What will you do when you retire? When you have no job to go to and no kids left in the house, where will you find purpose and satisfaction? What would you like to do?
Albert Einstein once said, “Imagination is more important than knowledge.” So set some time aside to imagine your dream retirement. As a CERTIFIED FINANCIAL PLANNER ™, one of the exercises I take my clients through is based on identifying their top goals and priorities for life after work. For some, it’s more time with family. For others, it’s about travelling the world, going to school, volunteering and serving others, or moving to a warmer climate.
One couple recently told me that living on the water was their dream. Waking up each morning and seeing the constant change of scenery and wildlife was a goal worth having. Living in a home where their grandchildren could come to swim, boat, fish -- and even skate in the winter -- was something they could get excited about. Scott Freerksen, owner of Lake Front Living Realty, explained that his clients often come to him when their children have grown up and have left the house on the cul-de-sac where they grew up. “The empty-nest parents often say they want to downsize, but when they see how little space downsizing provides, they realize they need enough space for their kids and grandkids to visit.” Using a play on the word vacation, his clients call living on the water a “stay-cation”.
So if you’re looking for some motivation to start and continue your retirement savings, imagine yourself brewing a cup of coffee and walking down to your dock where you can relax and watch the ripples across the water while the rest of the world goes off to work.
About this column: Steve Davis is a local CERTIFIED FINANCIAL PLANNER™ who has been helping clients in Mansfield, Foxboro, Easton and other local communities for more than twenty years. You can find out more about Steve and his company, Davis Financial at www.talkwithdavis.com or on Facebook at www.facebook.com/davisfinancial
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities offered through LPL Financial Member FINRA/SIPC