Every financial planner out there will start a conversation with what are your financial goals? Whenever you sit down with a piece of financial planning software, it will ask you to enter your goals. And if you snap back, “it’s always with the goals with you people”, they’ll tell you that you can’t make a plan without a goal. Most of the time, you get in your car knowing the destination you want to end up at. Now whether you have a map, or a GPS or miraculous sense of direction, at least you know where it is that you want to end up!
Oddly enough, though, when it comes to your finances, you need a goal and a number so that you can write it down and SEE it. That’s what makes the number real; when you see it. Before you have “the number” in your mind, it’s just a glittery idea. Put the number down so that can see how much you have to earn, to save, to invest to get to it… so that you an formulate a plan.
One of the biggest misconceptions I see when people come to talk to me about a retirement plan is that they think they need only 70% of their pre-retirement income, if the big ticket items are all paid off. (Items like the house, college loans, etc.) Yet in actuality, most folks will need about 120% depending upon how long we live, the lifestyle we want to live and the unforeseen medical expenses that may occur.
Keep in mind,
- women who reach age 50 today without a serious health problem can reasonably expect to see their 92nd birthday
- women over the age of 65 outlive their husbands by about 15 years
- and 55% of women (vs. 22% of men) are not covered by pension plans.
You need a goal. A goal you can build a plan to achieve it. That goal needs to be written down, or put into visual form, so that you can easily recognize the building blocks, the short falls and the bridges your plan needs to reach it!
For more on goals, check out our podcast on Becoming Wise About Your Money This Year