Retirement Planning

You’re Going on Vacation!

Where you going?

You: Mark, we’re going on vacation!

Me: That’s great? Where are you going?

You: “Vacation.”

Me: Wonderful, where to?

You: V-A-C-A-T-I-O-N, Mark. Are you not listening?

Me: That’s awesome, what’s your destination?

You: “Vacation” is our destination!

This dialogue seems a bit silly, right? However, this is a conversation that plays out in many households, and within the walls of many financial service offices around the country.

Instead of vacation, the conversation is about retirement and money. Couples have very different ideas about retirement. Their advisor may have a completely different perspective about what retirement is. Everyone agrees that saving for “retirement” is a good thing. They want to make it to retirement, but no one is really communicating about an agreed upon destination. Retirement becomes the ambiguous destination, like “vacation,” in our opening dialogue. 

Without an agreed upon destination however, it’s pointless to discuss retirement strategies or financial products.  Strategies and products aren’t likely to get you there in the most efficient manner, when we don’t know where “there” is.  

Questions Desperately in Need of Answers

  1. What’s your vision of your future?
  2. What will it look like before and after your career ends?
  3. Where are you going?
  4. How will you get there?
  5. How will you spend your time?
  6. Who would you spend it with?
  7. How do you want experience life?
  8. What steps should you take to plot your route?
  9. What roadblocks might get in the way?
  10. How and when will you recalculate a more optimal route?

These are just a handful of the questions that need to be discussed before making financial decisions that impact your future.

What’s the Purpose of Owning A Car?

Philosophically speaking, what is the purpose of owning a car? I suppose if you ask enough people you’ll get a variety of answers. However, many would agree that the purpose of owning a car is to get somewhere. To move away from point A, towards point B.

Follow up question. What do we need to make the care go?

We might all agree that you need fuel to generate the power that turns the wheels and propels the car forward. Without any fuel, the car goes nowhere.

Therefore, buying fuel is a requirement of effective car ownership. Without it, you won’t be able to get from here to there, or wherever it is you wish to go.

On the other hand, the purpose of owning the car isn’t to buy more fuel. “I specifically own a car so that I may buy more fuel,” said no one ever!

Why Develop A Written Retirement Income Plan?

Having a written retirement income plan is similar to owning a car. The purpose of having the plan is to get you somewhere. That “somewhere” might likely be your ideal vision of the future, or a desired lifestyle full of experiences. Nevertheless, the purpose of the written plan is to ensure that you have the best shot of making your vision a reality.

In order to make the written retirement income plan go you must have money to fuel it. Thus, it is critical that you save money and leverage your retirement resources effectively to fuel your trip. Without financial resources, your written retirement income plan goes nowhere.

However, the purpose of owning a written retirement income plan isn’t necessarily to make more money. Without purpose and vison of what you will use your resources to accomplish, accumulation of assets is a bit like owning a car for the specific purpose of “buying more fuel.”

Yes, money is required to make the written income plan go in the direction you envision. However, without purpose and vision of where you want to go, owning a written retirement plan for the sole purpose of “making more money “is the equivalent of owning a car for the sole purpose of “buying more fuel.”

Fuel And GPS?

Perhaps you own retirement accounts like IRAs. Maybe you think, “I have a retirement plan through work” referencing a 401K or other workplace sponsored retirement accounts. While these represent sources of fuel, they are no substitute for a GPS navigation system.

The written retirement income plan makes it possible to map a route mapped like a GPS navigation system. You put in coordinates for your destination, and then the system tells you turn by turn how to best navigate to your destination. This allows you to make decisions that most efficiently leverage your resources.

From time to time roadblocks occur. Slow traffic, road construction, or an accident may call for the GPS to recalculate a more optimal route.

Our computer aided retirement design program is our GPS navigation system. It allows us to map out a route together, spot potential roadblocks, and then provide guidance on how to maneuver around the obstacles to conserve fuel and avoid delays. After all, we want to get you to your destination in the most enjoyable manner possible without running out of resources.

However, the GPS is utterly useless unless we have coordinates to input. No destination, no route, no guidance. It’s “vacation” without any direction. You going north, south, east, or west? To the beach, to the mountains, to the big city, or to the country?

Your retirement accounts are not a guide or a set of principles on how to use the resources most efficiently in order to maximize your life’s enjoyment and fulfillment. It’s just fuel for the trip.

What to Do Next?

Have a sit-down discussion with your advisor, spouse, and anyone else impacted by your decisions. Openly discuss questions about your vision of the future.

Ask good philosophical questions about your desired lifestyle.

  • What does it look like?
  • What do you want to do?
  • Whom do you want to do it with?
  • Where do you want to go?
  • With whom do you want to get there with?
  • When do you want it, and how often?

When drafting a written retirement income plan, envision your future. Your advisor should be facilitating this discussion, helping you to ask the right questions, challenge you to answer the uncomfortable ones, and gathering the necessary coordinates for his own GPS along the way.

Avoid hopping in the car and leaving the driveway until you have a set of specific directions on how to get to the retirement that is achievable for you. Make sure you have the GPS coordinates in hand. The system should be turned on to spot potential roadblocks and make recalculations as needed.

Your advisor should be sitting shot gun, focused on the journey to get you to your destination, not your money.

Design a path to utilize your resources to maximize life’s enjoyment and fulfillment. It’s never too late to begin your journey!

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