Imagine that you decide to take a vacation next year. Imagine all the work and effort you will put in so that it will be the best vacation ever. Imagine picking a destination, planning your trip, selecting hotels, and setting timelines. Imagine the details, the phone calls, the budgeting, the record keeping, and the need to anticipate any event that might jeopardize the success of your trip.
Now, force yourself to realize that as of today you are on a "trip to retirement", a trip that will impact the rest of your life. Are you spending the same amount of time and effort planning for that trip as you do for your vacation?
No, if you're the average person. Most of us have no clue about the need for planning for retirement. Or, even worse, way in the back of out minds we know we need it but can't get around to doing it because we have no idea how to begin.
Think of your vacation, again. Can you imagine getting into your car with no idea where you are going? Or what to take with you?
No, you can't but that is exactly what you are doing with your financial future if you do not have a Financial Plan.
For example, let's imagine, again, that you are a 40 year old man and you want to retire at 55 years old. You are earning $45,000 a year, are unmarried, and childless. How much money do you need to save every year to be able to retire?
There is no way to answer that question without having a good Financial Plan and without that plan his trip to retirement will not end where he wants it to end. Like your vacation, you absolutely need a Plan to get from where you are to where you want to be. Period. End of discussion.
Okay, so what is a Financial Plan and where can we get one?
The world is full of professionals who would love to help you with a Financial Plan. Like any other professional, they would like to make money by helping you with that Plan. Some may be fee-based and charge a part of your assets. Others may be commission-based and make money from products they sell you as part of your Plan. Either way is okay as long as you know who you are dealing with and what their agenda is, but you can do most of your Financial Planning yourself. The Internet has made everything you need available from sites like Yahoo Finance, The Motley Fool, and Winston-Salem based SimpliFi. Searching these sites will give you an education and and lots of information on what to do next.
But even with all that information, you won't be able to begin without one, basic fact: Where do you want to go?
Let's look at our example of the man who wanted to retire at 55. While selecting a retirement age is a small part of finding a destination, he needs to know so much more before he can finalize that "destination". Other needed facts include how much money he wants per year after he retires, how healthy he is so he can plan for disability or Long Term Care, how long will he live so he doesn't outlive his money, and how much of a stomach does he have for risk including market losses like the current economic climate. And what if he wins the Lottery? Or loses his job in the next 5 years? Or a great aunt from Wisconsin dies and leaves him a stable of expensive polo ponies? All of these possibilities can be handled by a good, comprehensive Financial Plan that considers investments, taxes, health issues, world events, and is reviewed on annually.
But enough, you get the point. Get a Financial Plan. Design it yourself or work with a professional. You can do it either way, but do it, and do it now. Make your trip to retirement a successful one.
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