Step One: Enough for Me
How much money do I need to take care of myself in retirement? If I become disabled?
How much will I need to start my business? Buy the house? Get a new car?
The first step in the process is having a goal-setting conversation with your advisor. Any financial planning firm should be able to give you “Your Number,” whether it’s for education, retirement, or that shiny new toy.
What are you looking for? You want one number for each goal that you set. Whether it is a purchase, retirement, or something else.
Unfortunately, too often the conversation stops here.Step Two: Enough for My Family
How much will it take to provide for my spouse? To leave something for my children?
The next layer of “Enough” comes in the form of what you leave to those you care about. Making sure their dependents are protected in the event of death or disability is a priority for many. But unless you define the ways in which you want to leave a legacy to your heirs, planning is nearly impossible.
What are you looking for? Again, you want one number for legacy that you want to leave to your family. Work with your advisor to have a full conversation on what your hopes are for your loved ones.
Step Three: Setting a Finish Line
Add up your numbers. This is your finish line.
These should be single, lump sums. Not how much you should be saving, but an end goal.
One of the most depressing beliefs I encounter is that we MUST work eight hours a day until we hit “retirement age,” where we then get the privilege to start hoping that we won’t outlive our money.
But let me ask you this: what would you do if you already had crossed your “retirement savings” finish line? If you knew you already had “enough”? Would you work less? Would you give more?
The Purpose of Finish Lines
The purpose of financial finish lines is to give us the confidence to do the things we’ve wished for. Knowing that we have “enough” lets us do the things we’ve wished for ourselves, and especially the things we’ve wished for others.
Geoffrey Sadek, CFP®
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.