Lesson #1 – Every decision has a tradeoff. There is always a risk to go along with a reward and you will always be giving up something now (Ex: a new car) to get something later (Ex: comfortable retirement). As you submerge yourself into the questions of a comprehensive and holistic plan, you will notice that everything is connected, and it can become rather daunting.
Most of the questions we are asked are responded to with a question of our own, because the answer depends! Here is a common one.
Do I have enough money to retire? It Depends!
- How much do you need to live off each year in retirement?
- What inflation numbers are you using in your calculations?
- Will you have debt and when will that be paid off?
- Have you considered when to take Social Security?
- What is your tax strategy to increase tax efficiency for retirement drawdowns?
- Do you want to travel? Give charitably? Leave anything to your children? What about health concerns? Long Term Care? Final Expense Planning?
The list can go on for quite some time. But every question depends on your unique circumstances.
The point is, if you want a Financial Plan that gives you confidence in your future, and that of your family, then it must be detailed and address the risks that come along the way in order to accomplish your goals. The earlier that you can start detailing this plan and making the necessary changes, the more prepared you will be– but it is never too late to address it either. These plans need to be reviewed and updated as the landscape of economics, laws, politics, and regulations change– it depends!