Today, a successful retirement requires much more purposeful planning that accounts for major generational changes in how we work and live. I believe that engineering a modern retirement blueprint starts with four essential building blocks: Health, Family, Purpose, and Comprehensive Financial Planning.
In the first installment of this four-part series, I discussed some new ways for seniors to think about health and longevity.
In part two, I’m going to share three reasons why it’s so important for folks to get their year-end financial planning in order so that they can start the new year strong.
1. Feel more secure.
At the end of 2019, we were advising our Keen Wealth clients to anticipate some market volatility in 2020. History told us that the bull market wasn’t going to last forever. Global trade disputes and the 2020 presidential election were also creating uncertainty on Wall Street.
But no one could have predicted that the cause of the economic slowdown would be a global pandemic that changed how we live and work for most of the year.
Now, I’m not suggesting that a comprehensive plan can completely isolate your finances from an unexpected event like COVID-19. But when you have a plan that covers life transitions you are anticipating — like paying for college tuition, buying a new house, or retirement — it’s also possible to build in some emergency levers that you can pull if your basement floods, or if you get in a car accident, or if you lose your job unexpectedly.
Knowing those funds are there if you need them can help you keep your composure and make tackling a sudden challenge less stressful. And if you’re working with a fiduciary advisor who knows you, knows your family, knows where you are in life and where you’re planning to be, it can make it easier to stay on track towards your long-term goals.
2. Feel more freedom.
Folks who try to do their financial planning solo often turn to rules of thumb like, “Retirees need to replace 75% of their income,” or “Plan to withdraw 4% every year in retirement.” I’ll grant you that following this kind of advice is probably better than nothing. But when you lock yourself into numbers like this, you’re also putting some serious restraints on enjoying your assets at every stage of your life. I’ve known folks who kept putting off dream vacations or making basic comfort upgrades to their homes because they were so focused on hitting arbitrary number goals. Sadly, in many of those cases, life kept getting in the way and tomorrow never came.
Likewise, many retirees who have that 4% number stuck in their heads live so conservatively in retirement that they don’t enjoy the nest egg they’ve worked so hard to build. A comprehensive financial plan can give you more options. For example, you might plan on a slightly larger withdrawal rate early in retirement so that you and your spouse can take that cruise or buy that camper and drive across the country. Then, you could plan for a lower withdrawal rate later in retirement as you start to slow down and settle into your golden years.
3. Feel more in-control.
One common thread in the examples I’ve described is that when life takes a sudden turn, folks who have a comprehensive financial plan remain in control of how they respond and how they adjust going forward. Transitioning from 2020 to (hopefully!) a much more positive 2021 is clarifying the importance of that control for many folks. COVID-19 certainly made a lot of decisions for us in 2020. But folks who understood how their plan was built to help them navigate through the twists and turns of the pandemic were able to work with their advisors and figure out where to adjust and where to stay the course.
That’s one of the reasons why providing education is a core value at Keen Wealth. Clients tell us that our blogs, podcasts, and webinars have helped them maintain perspective this year on how, from a financial standpoint, even global events like the pandemic are really just short-term disruptions in a plan that spans decades. When your feelings aren’t all wrapped up in immediate financial worries during a crisis, you have more space to focus your emotions on caring for your friends and family and reaching out to your community.
If you need a little reminder that your family’s long-term plan is what’s going to set the tone for next year, make an appointment to work through this year-end financial planning checklist with a Keen Wealth fiduciary advisor. Locking down these decisions in the next couple weeks can go a long way towards making you feel freer, more confident, and more in control in 2021.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with nearly three decades of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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