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ne of the first things a financial planner talks about with a new client is goals. That makes sense, as planning for something without a target in mind is tough. For most people, expressing goals is actually one of the hardest parts of the process. The goals discussion usually drifts into topics like paying down debt, saving for retirement, and preparing for college. Those goals seem appropriate and are likely to be what the advisor wants to hear, but are side effects rather than the core of a real goal. Financial planning should support the rest of your life, not exist in an abstract sense disconnected from your true hopes and dreams. Many people don’t even make it to the point of an awkward conversation about goals with an advisor. The ostrich syndrome is very real — if you don’t look at your long-term financial plans, then they don’t really exist, right? One way to think about goals is how long you want to work. These are a few approaches I’ve seen as a financial advisor.
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YOLO: Work Until You Die A surprising number of people deliberately have no retirement or financial goals, even after achieving an income where they could save. They create a false dichotomy between delaying gratification until later and enjoying life while they’re young(er). In exchange for a slightly more carefree and extravagant now, those with a You Only Live Once philosophy take on a lot of risk. Unexpected life events happen, and not everyone gets to work as long as they
think they can. To me, this seems more about rationalizing a way to avoid a difficult topic than a real strategy. Go With the Flow: Work Until Retirement Age This is the normal approach: Keep down debt, balance saving and spending, get that 401(k) match, accrue Social Security credits, and retire around your mid-60s. Your main financial goal would probably be: “I don’t know, but more is better.” Any big income advances are met with commensurate lifestyle increase, so retirement around traditional retirement age is a self-fulfilling prophecy, regardless of how much money you actually make. Financial Independence: Work Until … ? Some people decide to draw a lifestyle line in the sand. As income increases, they don’t spend more. The magic of compounding means that investments can cover living expenses surprisingly quickly. Then anything is possible, including travel, volunteering, a new career, or even keeping the current job. This approach creates a lot of resilience and opportunities in the future, but isn’t for everyone. Where Are You? Brainstorming your wildest dreams on a piece of paper with no regard to finances is a great way to start figuring out what your actual short-, medium-, and long-term goals might be. Your wildest dream might be exactly what you’re doing now, and there’s nothing wrong with that. Just figuring out what you want to do and finding the commitment to follow through is the hard part. Advisors can model a path to almost anything you can imagine, if you just know what you want. If you decide what you want to accomplish and develop a willingness to commit and follow through, your future advisor — and your future self — will find that planning for it might be the easiest part. Gene Gard is Co-Chief-Investment Officer at Telarray, a Memphis-based wealth management firm that helps families navigate investment, tax, estate, and retirement decisions.
