Benjamin Franklin once said “If you fail to plan, you are planning to fail.” Wise words from a wise man. When it comes to finances, most people spend more time planning their next vacation than planning their retirement. Why? The task seems overwhelming, people think they will never be able to retire, or they simply don’t know where to start. When working with clients who are further out from retirement, they are often very vague about what they want retirement to look like. We start with a baseline. What would it take for you to retire at 65 and maintain your current lifestyle? Once you’ve figured out where you are aiming for, even if it is vague at this time, you have a direction to move towards.
Next, automate as much as you possibly can to get you to your goal. Set up payroll deductions into your 401k or other retirement plan, have savings allotments direct deposited into savings accounts instead of your checking account. Set up automatic deductions from your checking account to an IRA, Roth or Brokerage account. The key is for you to make it automatic every month. For most people, if they leave money sitting in their checking account, it will get spent. Systematically take away the temptation.
Have a coach or adviser to keep you accountable. This past year I started seriously exercising again. What I discovered about myself is that I need accountability to make it happen every day. For me, that means scheduled classes with an instructor directing me. If I don’t show up for classes, I get charged extra. Needless to say, I was out of bed at 4:30 this morning and headed to the gym. When it comes to a financial plan, regularly scheduled meetings that cover specific topics and areas of your financial life are important. They are not meant to scold you, they are meant to keep you on track so that you keep your promises to yourself and your spouse. I often have clients come in and say “I was bad, I didn’t get to ….” That isn’t the point of an adviser. This isn’t confession. The point is to get you back on track. Regularly scheduled meetings make sure that happens.
Have the structure of a financial plan to work from, no matter how vague it is. Systematically automate as much as you possibly can to make it easier to achieve your goals. Have a coach or adviser to keep you accountable. If you put in place the right systems and structures, you greatly increase your odds of financial success over the long run.