Stop Retirement Planning and Start LivingSubmitted by WWK Wealth Advisors on October 13th, 2013
YOU. Retirement planning is forcing you to march towards a destination rather then organizing your life to serve the things you care about most.
Traditional planning has you choose a time in the future when you will "retire" and then organizes your financial life in order to work towards it. This creates an easy math problem to solve but isn't close to how your life really works. It limits life's possibilities, forcing you to "stick to the plan” and possibly sacrificing your life for a tomorrow that you may not care about or may not come.
Your life isn’t a destination so don't organize it like one. Life is a journey. Your priorities will change as you mature and your financial life should adjust along within them. Last week, I met with a good friend and client to discuss financial priorities. Ten years ago (in his 20s) his priorities were strictly professional. Five years ago (in his 30s), he had a more traditional retirement goal. Today, he wants more time with his family (in his 40s) and thinks he will most likely be productive well into his 60s or 70s. As a result, we are now working toward him taking a year away from work every five years. Will this change again? probably.
Rather then set rigid long-term financial goals, set short, medium and long-term priorities. Priorities change over time to adjust to your life. The first step to making smarter financial decisions is having clear priorities that you care about.
Here are four steps to help you organize your financial life around the things you care about most.
1. Define your one year financial priorities
These items are clear, prioritized and will happen within the year. Funds should be specifically set aside to provide for them.
2. Define your three year financial priorities
These items are clear but may take some time. Once you pick them, prioritize, set a timeframe and approximate cost.
3. Define your five years + financial priorities
These priorities are important but less clear. They are a work in progress so roughly define them and their importance. Work towards them but don't get too caught up on the details. For example, if you want to leave work in 10 years, spend time thinking and researching the possibilities rather then mapping out every detail.
4. Schedule regular check-ins to re-imagine your life
This is key. They are the foundation for your financial decision-making, so be sure their important to you. Your financial priorities should be reviewed every six months and re-imagined every year. When you re-imagine them, work from a clean slate. Don’t be trapped by previous versions. If you discover you no longer care about one or more of them, change them. It your life.
Question: What do you use as your foundation for making smart financial decisions? Let me know here or Roger Whitney