If you have ever spent any time with a financial professional, I’d be willing to bet that somewhere early in the conversation the inevitable question was asked: How much money will you need for ____?
Then, like a deer in headlights, you quickly try to think of a reasonable number that will not sound too high to be unattainable but one that will still provide you with enough to accomplish the thing in question.
QUICK. How much IS that?!
Here at Consolidated Planning, our planning philosophy focuses on helping you accurately understand the answer to this stress-inducing question for a better retirement.
In this article, we’ll help you understand why your retirement goals shouldn’t just be numbers, various future needs to consider, and the importance of planning for your retirement based on your ideal post-retirement lifestyle.
Your Retirement Goals Aren't Numbers
The good news is, numbers are not goals and goals aren’t numbers. Goals are ideas, at least they should be. They are the possibilities of what our lives might look like in the future based on the decisions that we make today. And these tend to change over time. And that’s fine.
It’s not just about retirement. For the past thirty years, the personal finance industry has mostly focused on helping people create wealth for retirement and then maintaining or even growing their wealth while in retirement.
However, most of us make the majority of our major life decisions involving money, and experience many of the major life transitions – somewhere between the ages of 18 and 40. These decisions are likely made long before you even begin to think about retirement.
Think about all the decisions you make in those years:
- Where will you attend college?
- What are you going to study?
- Will you take on student loan debt?
- Will you get a master’s degree?
- Will you take on even more student loan debt?
- What job are you going to take once you graduate?
- How much should you earn?
- Should you negotiate salaries?
- How do you negotiate salaries?
- What about employee benefits?
- Where are you going to live and with whom?
- Are you going to have kids?
- Should you buy a house?
- When should you buy your first home?
- Should you start a business?
- What about changing jobs?
- When should you sell your house and buy another?
Phew, that’s a lot. In fact, there is probably even more to consider. All of these decisions involve dollar signs and can have major downstream effects on your ability to reach your financial goals.
Yet historically, traditional financial planning has mostly focused instead on trying to predict THAT number and plan for the needs of the far future. This might look like addressing how much you “need” to retire in 40 years or the amount you will “need” to send your newborn to college in 18 years.
While these are certainly areas you can think about, what about those irreversible money decisions that you are making in your life right now.
Yes, right now.
If you dig into the question a bit, what you’re really being asked to do is to predict the minimum amount that your life is going to cost you further into the future than the total of your entire life experience to date.
If it feels overwhelming and imprecise that’s because IT IS.
Consider the iPhone in your pocket – it did not exist at the turn of the last century. You will be buying things in retirement that have not even been invented yet. The world will be a different place and you will be a different person by then.
So, how WILL you have enough to live the lifestyle that you want? How much do you need? What is a good answer?
Plan Your Retirement Goals Around Your Ideal Post-Retirement Lifestyle
When you guess your future needs or minimums to live your life, you plan for your bare minimum. Even a financial professional can only run the numbers based on what you know to be true today – not who you’ll become or what the future will hold.
When the “goal” is just a number — especially one tied to retirement potentially far off in the distance — that goal is more like a guess and less like a plan. That can make it hard to justify putting resources toward something that doesn’t feel real yet.
A better approach in planning for your retirement is to ask yourself: What’s coming up in the next few years, and how can I prepare for those things financially?
So instead of guessing at a far-off number, let’s talk about your vision for life after work. What does your ideal post-retirement lifestyle look like? What experiences, relationships, or contributions matter most to you? Once we know that, we can help you build a financial strategy that supports it — on your terms, and with clarity.
8066274.1
Exp. 6/2027
Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.
This material contains the current opinions of James M. Matthews and Consolidated Planning only. These are not the opinions of Park Avenue Securities, Guardian, or its subsidiaries.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. CP Planning Group, Inc. is not an affiliate or subsidiary of PAS or Guardian.
