How do you know if the financial planning you’re working so hard on right now is going to pay off in the long run? If you’re being diligent, putting money away, solidifying your legacy and preparing for the future, you want to know that you have a solid plan. If you want to get a good snapshot of your retirement readiness, you simply need to use the most powerful tool at your disposal: your brain. Your brain is the most powerful computer that exists and it’s also the vault for your concerns, needs, feelings, goals and fears. To get a picture of your retirement readiness, you need to picture yourself in your post-work years, living on the savings that you have accrued over your career. Are you happy or are you crippled under the weight of taxation, poor planning and the burden of loss over the course of your career? Factum Financial wants your retirement readiness picture to bring a smile to your face, not a furrowed brow.
A Retirement Readiness Mental Exercise
If you want to make this a more tangible exercise, Reader’s Digest suggested that you name the image of your 80 year old self who has reached the age of retirement. Give them some tangibility to know if your retirement readiness goals are accurate. You can look at all the charts that you want and hear all the jargon from financial advisors you can, but there is something sobering about picturing in vivid detail what a struggle it might be to rise every morning in your 70’s and head to a job as a grocery store greeter. If you have trouble picturing what yourself in that situation, look at your grandparents or the elderly folk in your life. What do you think their retirement readiness picture looked like at your age. If you are more worried than assured, you might need to make saving for retirement a bigger part of your financial strategy.
A Strategy That Actually Protects Your Wealth
While you’re picturing the results of your retirement readiness plan or thinking of a family member and their retirement lifestyle, it’s important to picture loss as part of that plan if you save for retirement using a company sponsored 401(k). The chances that you’re retirement savings can span the life of your career without taking a loss are pretty slim. And even if the losses never occur, you should picture in your retirement readiness plan what kind of tax rate you will be subjected to in the future. Has the tax rate gone down since your retired family members left the workforce? Likely not. What does this mean for your retirement readiness plan? Will you be subject to a tax rate that depletes your wealth before you graduate from this life?
These are the questions you need to ask yourself to make sure you are properly prepared for the years outside the workforce. Our team at Factum Financial wants you to know the stakes and to be fully prepared for the future, even if they aren’t our clients. As a gift to make sure that you are aware of the strengths and weaknesses in your financial planning, we’re giving a free Financial Picture Toolkit that will layout your financial readiness. It takes 30 seconds to give us your email and we’ll send you the kit now for free.