On this week’s episode of Tape Talk, Quint and Daniel look at the ways clients might become their own worst enemy when it comes to their financial plan. Here are four ways we see people sabotaging their plans.
Coming off some of the highest earning years of your life and likely with the least amount of dependents left in your household, you may have gotten used to spending what you want when you want to. One of the things you’ll face in retirement is the paycheck stopping and your spending now relying on a fixed pool of assets. This means that your plan requires some discipline to create a budget, monitor your spending, and stick with the plan.
If you have goals in mind for life and retirement that you’re not talking about with your financial planner, that’s simply not good! Your financial plan attempts to incorporate the many knowns and unknowns about your current and future financial life. If you have any ambitious goals which require financial resources it is better to talk about these with your financial planner early and revisit often so that your plan aligns with the picture you have in mind for your life.
Funding the Kids’ (or Grandkids) Life
Your retirement and financial plan is built around your life. So, while certain circumstances might make it simply unavoidable, it generally is detrimental to your plan’s viability to continually support adult kids over time. While this could take the form of education assistance or repayment, debt help, family vacations, and more if you haven’t built it into your plan as a goal these line items could add up to your plan not working. Now that you and the kids are all adults with your own financial lives it is important to have as honest of a discussion as possible least your financial decisions now coming back to affect them later when your plan begins to falter.
Not Thinking Through Speed Bumps
No financial plan is a perfect picture of what the future holds! This is why we update plans on a regular basis to incorporate new information and ensure the plan still works. However, there are a lot of variables that a good financial planner and review and assess to see how they might impact your plan. These variables such as the death of a spouse, long-term care, or a wide array of investment returns, can be modeled into your plan to see its impacts.