Disney’s adaptation of Pocahontas features a song where the young princess years to find adventure around the riverbend. When writing this blog, something about this song struck me. What is around the riverbend? Is there more to life that we can’t see?
We live in a world consumed in the now. As dwellers of the present, sometimes it is tough to see beyond what is right in front of us, and for good reason. The present swirls with responsibilities: bills, errands, work, family, friends all important facets of our lives that keep us swimming in the present. This mindset can also influence the decisions we make with our money.
Money is both a short-term and a long-term need. Right now your primary concern may be buying your first home, moving closer to your family, or starting your own family. Each of these steps in life comes with necessary costs, but it can become easy to get caught up in these expenses and forget about looking long-term. Let’s look at some ways you can start planning for the long-haul and figure out what the riverbend has in store for you.
You’ll Probably Live Longer Than You Think
The mortality rate for Americans steadily decreases each year, meaning people are living much longer than before. You being alive to see your 100th birthday may not be an unrealistic occurrence, and that is good. Living longer will allow you to experience the many joys that the world is capable of giving, but it is also wise to plan for your wealth to stretch and sustain you throughout your long life. This is the area that many people are concerned with.
A 2017 actuarial report found that the risk of people outliving their retirement savings is the retirement fear most people are least prepared for. They also found that only one third of consumers know how long their savings will last them in retirement. This is to say that numbers are important. You should also put these numbers in context. While you’re planning for retirement, break down the costs and assign real numeric values to them.
What will you spend on living costs?
How long are you projected to live?
- Think beyond genes and luck to help you determine about how long your life expectancy is.
- How healthy are you? Do you eat well? What is your exercise routine?
- Be conservative in your estimate. It is better to over plan and have excess money than to scramble and not have enough.
- Use this estimate to help you and your spouse come up with a number to work toward.
These are not easy things to think about, but they will affect you later on in life and planning for them earlier puts you and your family in a better position moving forward. Use this time to start making long-term goals. Long-term financial goals will help keep you safe and prepared for whatever the future brings.
What Should You Plan For?
You often hear the advice to save more. I read those two words save more in almost every financial blog I read. I want to help you not only read those words, but also learn how to put them to good use.
Long-term savings goals is more than just a buzzword, something people bring out at cocktail parties to sound smart. It should be something that is active, something that is present in your financial world. So where do you start? Below are some potential long-term financial goals you could start planning for.
- This is one of the last things on the mind of a new parent, but setting up a proper and updated estate plan with established guardians, trustees, and beneficiaries is a huge safety-net for your family.
- As a young family, your child’s future educational needs may not be at the forefront of your mind, but starting to save for your child’s education at a young age will help the money grow at a more consistent rate.
- Maximize your Roth IRA savings (contributions can be used at any time for any reason – i.e. College Education), look into a 529 investment plan, think about opening another savings account, or any other strategy you, your spouse, and your financial planner come up with.
- Planning for retirement is a serious long-term goal. Being as concrete with the numbers as possible will put you and your family in the most coveted position: security.
- We talked a little bit above about planning for living costs, but another thing you must plan for are medical costs. According to Fidelity, even a healthy couple could spend about $275,000 on routine care in retirement. This number would only increase if the couple does not have the same health luck. That’s why we prioritize Health Savings Account (HSA) funding with our clients.
- Think long and hard about when you should leave the workforce. This is not an easy decision and comes with many factors, but as the life expectancy increases people opt to stay in the workforce longer. Retirement is not supposed to last 30-40 years, keep this in mind when you are considering leaving the workforce.
Let Yourself Be Flexible
A financial plan is just that, a plan. It is something that can and should change as you grow. Just because a plan is malleable, do not think that you can adopt a lackadaisical attitude toward your savings goals. Do your future-self a favor and make a serious and thoughtful plan to accommodate the needs you will have as you get older. Want help? Schedule a consultation today.