There have been times many of us have set out to do something, no matter what the cost, to only find the cost was much higher than we were willing to pay. Luke 14:28 warns us of failing to calculate the cost of our life plans. “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?”
Most successful businesses adhere to a plan. Simply put, the leadership specifies where they are, where they want to go, and how they plan to reach their goals by putting them in writing. They expect changes along the way, but they work from a plan and adjust as needed. As true in the business world, you won’t achieve your goals if you never identify them and create a roadmap to accomplish them.
In today’s terms, let’s look at the “tower” referenced in Luke 14 as our retirement and legacy. If we don’t look at the future and make some reasonable estimates, how will we know how much we need to “complete” or fund our retirement, or how much we want to leave for future generations?
3 Common Myths Concerning Retirement Planning:
- “We have plenty of resources to get us through retirement. Whatever we have left will go to our kids and our charities of choice.”
The truth is the more resources we have, the greater the responsibility we have in stewarding them well in hopes of making the biggest impact. Its taken a lot of hard work to accumulate the wisdom and wealth you have and having a plan will ensure it will be leveraged for generations to come. Knowing what you and your spouse will need for your retirement and future years gives you the ability to foresee what you’ll be able to pass down so you can continue to grow, invest, and give those assets with a specific purpose – your legacy.
- “We are young and will have plenty of time in the future to plan for our retirement.”
The earlier you start planning and saving for retirement, the smaller the impact on your daily living. Imagine you plan to retire at age 65 and invest with a 7% average rate of return:
- Starting at Age 30: You can have $1.5 million by saving and investing $11,000 per year
- Starting at Age 45: You will need to save and invest $37,000 per year to get to $1.5 million
Additionally, the earlier you start, the more choices you have. Just like planning a vacation, when you look at the roadmap early, you have more options on where to stay, what to do and how to get there. Starting your financial plans early affords you more opportunities in how you will best reach your destination.
- “I’m not sure what my goals are for the future.”
You are not alone. The fact is that many people don’t know where to start when trying to determine their future financial goals. However, when we stop and imagine ourselves at that future point we can start seeing some of the things we want to do, things we need, places we want to go, opportunities we would like to have, etc. When we do this, and determine some of the larger goals we have, we create a baseline for future financial decisions. For example, if we know what amount of money our goals will require and have detailed plan on how we will accumulate that money, then any big decision we need to make can be compared with the plan and the impact it has to our goals. It may we want to add another future goal or remove one, we may want to re-direct some of our annual budget to something we want now, etc. Understanding the future impact of our current decisions is critical to making informed decisions so that we arrive where we are really wanting to go.
Why Today’s Need for Retirement Planning is Unprecedented
Gen X’ers, and even many baby boomers, and younger are faced with retirement situations unlike their parents and grandparents. Many of our recent ancestors worked at the same company for most of their career or at least could count them on one hand. Today’s reality is that employers are less loyal to their employees and vice versa. When we move from job to job we lose continuity in increasing our contributions to our retirement plans. For instance, when we go to a new job we may settle for the automatic 3% enrollment instead of continuing the contribution amount we worked up to in our previous job. Additionally, we often leave those retirement savings scattered over our past employers, not having a good handle on the investments. Here are a couple of other differences that require us to have solid retirement plans verses our past generations.
|Then (Our Parents, Grandparents….)
Retirement is a time in my life where I stop working and slowdown.
|Now (Us, our children….)
I don’t plan to quit working entirely, but I want to choose to work on things I’m truly passionate about.
|I will rely on my pension, social security, and what I have saved.||It is going to be up to me. There is no pension and social security will go through reform.|
|My plan is to create my lifestyle based on the income that comes from my pension and Social security||I need a plan to see how my assets will grow, what expenses I will have, and how they will be met in my retirement years.|
|Medicare and insurance from my pension will help cover my healthcare costs.||My generation is living longer, and the costs of healthcare are on the rise.|
For most everyone, all our savings, investing, and planning go to accomplish three things: provide for our future needs, make a difference in our family, and do the things we are most passionate about. Without knowing what we want and how we will use these resources, we are going after everything to get as much as we can without weighing the cost. Having a plan lays out how we will use what we have accumulated in a way that makes the most sense based on what we want while understanding what it takes to get there and what it means to achieve those results.
If you don’t want to wake up at some point in your future and wonder how you got there (or regret missing your dreams), start planning today. This is a perfect time of the year to start considering the vision for your life. Plans are there to prosper you, not harm you. They give you hope, peace of mind, and a bright future.