MONEY MATTERS

Do you have a plan?

Most all of us do an excellent job planning for days off from work, going on vacations and spending time with family. If you are a business owner, you most likely have some type of business plan. This plan evolves as business needs change, but in the end the plan is a guiding force for how the business operates and how it is sustainable.

When it comes to retirement though, a lot of people don’t have a plan. Why? Honestly, I’m not sure exactly why this happens. Maybe it is due to sacrifices made early in life or families not being on the same page with their goals and money. Either way, it’s an unforced error. If you think about it, retirement is nothing more than a large liability, and unforced errors can be costly. As an advisor, my job is to help clients become aware of this liability and how best to plan for it to increase their chances for success. What does a plan entail? A thorough financial plan is more of a guide rail. It isn’t an exact science and has a bit of an art to it. This concept is similar to how bumpers are used for beginners learning how to bowl. In a comprehensive plan, all details are accounted for, such as Social Security, pensions, IRAs/retirement plans, needs, wants and wishes.

Ideally, the client should design the plan, and the advisor’s role is to figure out how much of what the client desires can be realistically implemented, along with the cost. Is the cost being properly saved for, and is it being saved in the most efficient places based on time horizon and risk tolerance? If you are in or nearing retirement, how should you best allocate your funds? When you factor in all these data points, what is your likelihood of success? For most people, this is an unknown unless you put a plan in place and utilize reputable software to help to compile all these data points into a percentage of success.

Taking this a step further, you may have all the necessary ingredients for a successful plan but not have the experience in how to put it all together. For example, at what age should you take Social Security? Should you defer it until age 70 and miss out on the previous years’ income with which you were eligible? A well thought out plan will show this and can also show what your breakeven point would be for delaying Social Security. Would an annuity be beneficial or not? An annuity might not work for everyone. Sometimes an annuity can decrease the likelihood of success and vice versa. Annuities could be an integral part of a long-term retirement strategy, providing direction to overcome risks and important optimal benefits to help protect someone’s financial future.

The point is that there are many variables, and oftentimes, the thought of retirement seems wonderful, but the planning for it is intimidating. An advisor’s role is not only to help you climb the mountain, but also, more importantly, to bring you back down the mountain. Through the use of a well thought out and designed plan, the efficiency of the tools you have can be maximized, with the process simplified, which increases the likelihood for success and an enjoyable retirement.

~ Lee Williams offers products and services through Nowlin and Associates. He also offers securities and investment advisory services through Ameritas Investment Corp. (member FINRA/SIPC), which is not affiliated with Nowlin and Associates. Contact him at 334-703-3454 or lee@nowlinwm.com. Lee Williams MONEY MATTERS