July 2007
Many folks dread taking stock of where they are financially and what their retirement might look like when it finally arrives. They tend to put it off like they do medical tests and examinations. Being probed by strangers in very intimate areas is never comfortable and can be embarrassing, but is not an excuse to avoid going through a thorough evaluation with a professional financial advisor. Obviously the same goes with your medical health. In both cases, "the truth shall set you free" because when you know what your physical and financial realities are then you are in a position to either not worry about them or to take corrective actions. That is why we highly recommend that our clients allow us to give them a thorough financial examination and annual financial checkups to make sure they are in good financial health.
Like most people, my wife and I spent the first 10-15 years of our marriage living paycheck-to-paycheck and saving very little money. We should have been on a budget but that was no fun. It was like being on an "allowance" as a kid and we were now grownups who could do what we wanted when we wanted. The actual process of creating a budget sounded like as much fun as bending over for a prostate examination.
Needless to say, that way of thinking led to some sleepless nights and nightmares of mounting credit card debt primarily for my wife who has been kind enough in our marriage to worry for the both of us.
When financial stress in our lives would get to that point we would force ourselves to sit down and assess our financial condition as ugly as it seemed. The funny thing is we would always come away from those budget summits in the kitchen feeling a whole lot better about our economic situation. It was never as bad as we feared. The reality was that we had enough income we just had to be more responsible on how we spent and saved it.
Many years later when I made the career decision to walk away from a financially rewarding investment management business in Grand Rapids to help start Front Street Investment Management in Traverse City, having a good handle on our financial condition was imperative. I was not only substantially reducing our current lifestyle but I was also jeopardizing our life together in retirement. It was now my turn for some sleepless nights.
The fact is having a financial plan and frequent financial checkups allowed us to know where we stood and have some confidence where we should be when I ready for retirement.
Take it from me. Going through the process of identifying all of your current and future liabilities, the sources of future retirement income, and determining the amount of investment assets that will be available to provide supplemental income for a comfortable life can be liberating. It gives you a sense of relief in that you know where you are now financially and where you need to be to provide the retirement life you want or at least can afford.
Even when the projections are disappointing there may still be time to take action to delay retirement or revise the expected retirement lifestyle. Not planning leaves your retirement to chance which can be a bad bet to make and totally unnecessary. It is as dumb as leaving your physical health up to chance.
We all know people in our life who suffered serious medical conditions or maybe even passed away because they procrastinated or did not want to subject themselves to an embarrassing or uncomfortable medical test or procedure that was recommended.
My wife recently lost her mother to colon cancer because, like many people, she did not want to have a colonoscopy as advised by her doctor. It was such a tragic situation because this was a wonderful person who should have been with us for many more years. Her death was so avoidable. Needless to say, we insist that all of our friends and family over 50 years of age have a colonoscopy and will nag them until they do.
When talking about someone's financial health there seems to be less urgency because it is only money. We have all heard "if you have your health, you have everything" and "money can't buy happiness". While I agree that you need good health to enjoy the fruits of your labor, I can tell you it is pretty stressful to be nearing retirement with little to show in savings for many years of work.
People are living so much longer than they did 50 years ago. When I was young, a person's life expectancy was early to mid 70's. That meant that retirement was expected to last about 10 years give or take a few. Now most of us have to plan on our retirement lasting 20 years or more. I personally plan on being that little old man in the office who "kicks over' right at his desk but Jason and my wife might have something to say about that. A "comfortable retirement" is a subjective concept and different for everyone. Therefore the required amounts of retirement savings to help provide that lifestyle will vary. Some people will need much more than others.
The point is the sooner you have a financial evaluation and plan put together the more time you will have to make adjustments to the plan so that your eventual reality is close to what your expectations are now.
So if you have not yet had a financial assessment and developed a financial plan make a promise to yourself to do it soon. Don't put it off. We offer this service free to our clients. The more years you have before retirement the better but even if retirement is just around the corner it is better to learn the financial truth now. Don't be afraid.
Also, for those readers over 50 years of age, please include a colonoscopy as part of your health plan if you have not had one. It is a simple procedure that can help assure that you will be around for your family and friends and to reap the benefits of the financial plan.
Many folks dread taking stock of where they are financially and what their retirement might look like when it finally arrives. They tend to put it off like they do medical tests and examinations. Being probed by strangers in very intimate areas is never comfortable and can be embarrassing, but is not an excuse to avoid going through a thorough evaluation with a professional financial advisor. Obviously the same goes with your medical health. In both cases, "the truth shall set you free" because when you know what your physical and financial realities are then you are in a position to either not worry about them or to take corrective actions. That is why we highly recommend that our clients allow us to give them a thorough financial examination and annual financial checkups to make sure they are in good financial health.
Like most people, my wife and I spent the first 10-15 years of our marriage living paycheck-to-paycheck and saving very little money. We should have been on a budget but that was no fun. It was like being on an "allowance" as a kid and we were now grownups who could do what we wanted when we wanted. The actual process of creating a budget sounded like as much fun as bending over for a prostate examination.
Needless to say, that way of thinking led to some sleepless nights and nightmares of mounting credit card debt primarily for my wife who has been kind enough in our marriage to worry for the both of us.
When financial stress in our lives would get to that point we would force ourselves to sit down and assess our financial condition as ugly as it seemed. The funny thing is we would always come away from those budget summits in the kitchen feeling a whole lot better about our economic situation. It was never as bad as we feared. The reality was that we had enough income we just had to be more responsible on how we spent and saved it.
Many years later when I made the career decision to walk away from a financially rewarding investment management business in Grand Rapids to help start Front Street Investment Management in Traverse City, having a good handle on our financial condition was imperative. I was not only substantially reducing our current lifestyle but I was also jeopardizing our life together in retirement. It was now my turn for some sleepless nights.
The fact is having a financial plan and frequent financial checkups allowed us to know where we stood and have some confidence where we should be when I ready for retirement.
Take it from me. Going through the process of identifying all of your current and future liabilities, the sources of future retirement income, and determining the amount of investment assets that will be available to provide supplemental income for a comfortable life can be liberating. It gives you a sense of relief in that you know where you are now financially and where you need to be to provide the retirement life you want or at least can afford.
Even when the projections are disappointing there may still be time to take action to delay retirement or revise the expected retirement lifestyle. Not planning leaves your retirement to chance which can be a bad bet to make and totally unnecessary. It is as dumb as leaving your physical health up to chance.
We all know people in our life who suffered serious medical conditions or maybe even passed away because they procrastinated or did not want to subject themselves to an embarrassing or uncomfortable medical test or procedure that was recommended.
My wife recently lost her mother to colon cancer because, like many people, she did not want to have a colonoscopy as advised by her doctor. It was such a tragic situation because this was a wonderful person who should have been with us for many more years. Her death was so avoidable. Needless to say, we insist that all of our friends and family over 50 years of age have a colonoscopy and will nag them until they do.
When talking about someone's financial health there seems to be less urgency because it is only money. We have all heard "if you have your health, you have everything" and "money can't buy happiness". While I agree that you need good health to enjoy the fruits of your labor, I can tell you it is pretty stressful to be nearing retirement with little to show in savings for many years of work.
People are living so much longer than they did 50 years ago. When I was young, a person's life expectancy was early to mid 70's. That meant that retirement was expected to last about 10 years give or take a few. Now most of us have to plan on our retirement lasting 20 years or more. I personally plan on being that little old man in the office who "kicks over' right at his desk but Jason and my wife might have something to say about that. A "comfortable retirement" is a subjective concept and different for everyone. Therefore the required amounts of retirement savings to help provide that lifestyle will vary. Some people will need much more than others.
The point is the sooner you have a financial evaluation and plan put together the more time you will have to make adjustments to the plan so that your eventual reality is close to what your expectations are now.
So if you have not yet had a financial assessment and developed a financial plan make a promise to yourself to do it soon. Don't put it off. We offer this service free to our clients. The more years you have before retirement the better but even if retirement is just around the corner it is better to learn the financial truth now. Don't be afraid.
Also, for those readers over 50 years of age, please include a colonoscopy as part of your health plan if you have not had one. It is a simple procedure that can help assure that you will be around for your family and friends and to reap the benefits of the financial plan.
John W. Gudritz, CFA
john@frontstreet.com