Start your Conversation with a Financial Professional
When you think about your financial future, do you have one clear idea of what your retirement should look like, or is the landscape full of competing possibilities? Do you and your family members share the same vision, or have you yet to talk it out? Have you charted out the path to your destination, or are you waiting to pick a route?
Asking yourself about your financial future can sometimes feel like it just leads to more and more questions. But asking questions is a great way to start your conversation with a financial professional.
In previous years, you may have already spent time considering what your life goals are and what you want your future to look like. When was the last time you reevaluated those assessments? The events of 2020 triggered seismic shifts for many. From changing career goals to prioritizing time with loved ones, these internal shifts can require financial planning shifts. Articulating these goals, either for the first time or as a revision to a prior plan can help you, in concert with your financial professional, answer other important questions:
- Are these changes a permanent part of your financial plan or a temporary detour that will ultimately lead back to your original aspirations?
- If you feel like your new perspective is transient, what changes could be made in the short term that will enable continued progress toward your original purpose?
- If there have been more fundamental shifts, how can you best reflect those in your retirement plan?
Figure out your current spending patterns for each and brainstorm how they could change when you retire, and then review your itemized list with your financial professional. They may have additional observations that change your calculations. They will also be able to point you to internet-based calculators and other tools that help forecast how these expenses may change over time with inflation or life changes down the road.
For each of these, think through the possibilities in some detail. For example, if travel is high on your priorities list, what kind of travel are you thinking about? Are you imagining balcony rooms on luxury cruise lines or an RV that gives you maximum flexibility for movement while still allowing you to “be at home”? The expenses related to those two types of travel are very different and illustrate the benefit of a detailed approach to your retirement picture.
Work with your financial professional to assess the income and assets that can support these plans. Gather the latest statements you have from any of the following sources of income:
- Social security
- Pension or employee contribution plans
- Part-time work
- Other sources: Do you have real estate, rental income, or any structured payments?
You and your financial professional can add your income from these sources together, noting what sources are absolute and which may vary slightly (or a lot) over time based on the economic landscape and market fluctuations. Lifetime income can play a role in getting you answers. To sustain your vision for the long term, no matter what it looks like, it’s helpful to have a plan for a steady, predictable income stream. And when you think about the potential outcomes from your goals, your retirement income has more meaning.
The process of identifying the goals you have and planning a financial strategy that can successfully fund those goals for you and your loved ones can seem daunting. Unexpected internal changes as well as surprising externals forces can drastically change the course of that plan in unanticipated ways. Consider breaking down each step of the planning process into manageable tasks that can help chart a course toward successfully financing your objectives.
You can also alleviate some of the stress surrounding changed circumstances by diversifying your investments in a manner that can withstand the uncertainly of the markets. And in looking at your financial future, long-term funding should account for risk and return tolerances, time horizons, savings needs, and the diversification of asset classes and products.
Want to continue the conversation? Contact a financial professional today.