Here are 3 interactions from clients that are interesting and meaningful.
Do I need a million dollars to be able to retire comfortably?
That question needs to go a bit deeper in order to provide a relevant answer. As you know by now I am not a fan of financial information provided by mass media, which presents ideas without explanation. The million dollars for retirement is industry speak and generally accepted as a benchmark. However, the phrase retire comfortably has different meanings for different people which I will discuss in a minute.
Successful retirement should carry an aspect of financial independence. That is you will not be totally reliant on outside sources for your income, such as government benefits or rent from an income property. Financial independence means little or preferably no debt, and productive spending habits. It’s a vicious cycle, when the people with destructive spending habits are the ones that most likely will want a million dollars but are the least likely to be able to achieve that. The less financial responsibility you have in the future the more flexible you can be with your retirement date and your retirement goal in dollars.
In other words a million dollars isn’t the only thing you need for retirement. More importantly what is your realistic achievable number for your retirement? As we work together in our professional relationship we will uncover your own personal number. And it may not be a million dollars.
In a recent meeting with a husband and wife we discussed different terms for the period in our lives where work is not front and centre. He said retirement she said financial freedom. The conclusion to our discussion was that they would like to arrive at a point in the future where work was an option, not mandatory. For instance working part time or starting a business. Whatever term you choose to name that period of your life in your future it must be relevant to you. The relevance will give you motivation to carry out the plan to achieve your goal. Again I must stress that ‘retirement’ involves financial independence which means little or zero financial responsibilities. Financial responsibilities are debt and dependents.
A client recently asked me: If you were me would you get an advisor for your investments?
Before I joined the profession of financial services and got my CFP designation I did have an advisor. Many years have passed since then, and I would still answer yes. The main reason would be that it takes a lot of time, expertise, and inside knowledge to be able to responsibly manage money. When I am ‘retired’ I want to spend 90% of my time outside in the garden. Don’t worry I love what I do right now, and it is a joy to work with my clients.
The period of your life when work is less important will involve more than a dollar figure. From now until that time you should be working to increase your which is assets minus liabilities. Ask yourself when do I want to retire and when is that achievable? With the answer to those 2 questions we will work to make it happen.