by Nicholas Hamner
Investment Advisor Representative & Director of Marketing
[email protected]
It was 13 years ago (or 13 years, 2 months, and 3 days if we’re being precise) that my daughter came into this world. Immediately I became a dad, and three days (and seven hours of sleep) later, I became that dad. Wheeling her out of the hospital in a cost-more-than-my-first-car stroller, strapping her into a car seat that could have kept her safe had we put her on a roller coaster, and driving the exact speed limit in the right lane all the way home from Princeton. My wife and I were ready to keep her safe and protect her against anything!
Thirteen years later, we’ve given her a sword and told her to go fight other kids. Things change.
I think it was the author C.S. Lewis who once said, “Day by day, nothing changes, but when you look back, everything is different.” We don’t necessarily notice our lives changing, but over a long enough time span, if we ever stop and look around, it’s amazing how different our lives have become.
More specifically, what you plan to do in your retirement is very often not what you end up doing. Look at where you were 10 years ago—is where you are today where you thought you would be back then? Maybe you thought you’d be traveling the world but instead discovered Netflix and a La-Z-Boy. Maybe you planned on spending time with the grandkids but the kids packed up and moved to Spain so you bought a fishing boat and a labrador retriever instead. Maybe you couldn’t wait to quit your job, but you missed the routine so now you’re working part-time in retirement behind the counter at Ace.
Who really knows what tomorrow looks like?
Where will you be 10 years from today? Based on your life so far, how confident are you in that prediction?
When figuring out things like “How much money do I need to retire?”, it’s important to understand that your life will surely change in ways you won’t see coming and you can’t predict today. It’s impossible to assign a precise dollar amount to an unknown unknown, which is why retirement budgets never work.
Sure you might know what your house payment will be a decade from now and have a reasonable idea of what your Social Security benefits will be, but past that… how have your predictions worked so far?
Who would have thought five years ago that a $2 carton of eggs would be $8? Or that a monthly payment on a basic sedan would rocket from $300 to $600+? That’s standard inflation on consumer goods. Those prices are supposed to rise. Now… let’s say you’re retired, your budget is tight and you’re worried about running out of money, and you get bad news at the cardiologist. All of a sudden you’re on a restrictive (and more expensive) diet that you didn’t plan on. How are you coping with that? How about all the folks whose neighborhood changed around them, had to move, didn’t know what to do financially, and are now paying in a year’s rent for a crummy apartment what they originally paid for the house 35 years ago? How do you think that feels?
Written income plans, as opposed to budgets, do prepare you for changes down the road. A written income plan—assembled with the help of a trusted advisor with your best interest at heart and keyed for inflation—is the cornerstone of a comprehensive retirement plan. It puts your money where you will most likely need it, but gives you paths to change as your life changes.
You don’t need to ask, “How much money do I need to retire?” Ask “What kind of plan do I need to retire?” instead. And if you’d like to learn more about putting your own written income plan together, all you have to do is reach out to us at 215-657-9200. We’ll find a time on the calendar, get together, and get started on planning your retirement for whatever life throws your way.