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The headline of a personal finance magazine’s
recent issue screamed, “Your tough financial
problems solved!” So many times the media is trying
to tell you that your financial decisions are “easy” to
make and they can be fixed with any number of
“simple” steps. But let’s be honest, many of your
financial decisions are complicated because of their
long-term impact on you and your family’s lifestyle,
and they involve significant emotional factors in
addition to merely crunching the numbers.
I am not saying you don’t have access to the
necessary information to solve these issues. The
Internet has more content available then you could
read in a lifetime on practically every subject of
finance. From the ever-changing tax laws to Monte
Carlo simulations (a type of algorithm used in financial
mathematics), the Internet gives you unfettered
access to probably all the product solutions required
to solve your retirement savings problems. However,
considering that a financial professional must be
registered just to talk to you about those products,
perhaps it’s not the product but the implementation
that merits the guidance of a trained professional.
The challenge for investors is that many times the
information presented is answering questions nobody
is asking. In my experience traveling all over the
country, I generally hear the same three questions
wherever I go: “Now what,” “What’s next,” and
“Should I be concerned?”
For example, the “now what” individuals cover
questions such as, “I’m in my mid-40s and I’ve been
downsized. What are my choices for my retirement
savings?” Or, “I’m in my mid-50s, how do I structure
my retirement savings so that I don’t run out?” The
“what’s next” people pose questions like, “What
should I know or do about that new tax law that
recently passed?” Finally, the “concerned” group
simply fills in their worries about their own personal
situation and asks for guidance. Again, I suggest that
perhaps it’s not the information acting as an obstacle
but it’s the interpretation that requires additional
guidance.
Saving for retirement is mathematically a simple
concept: Tell me how much money you want, what
rate of return you will get, and I can tell you how much
to put away. Unfortunately, in real life it’s just not that
straightforward. For your consideration, these are the
five fundamental steps you need to solve your
retirement issues.
- Estimate how much money you will need for
your retirement.
- Figure out where the money will come from.
- Estimate inflation rates for the rest of your life.
- Determine an asset allocation strategy across
all of your accounts that will adjust with your
age and risk tolerance.
- Develop a distribution strategy.
Hopefully these not-so-quick and not-so-easy
questions have provided you with the motivation to
seek the guidance of a qualified financial advisor. Be
realistic. This is the one time in your life you should
consider turning to a professional to help get the job
done right. Consult a financial professional today to
discuss your unique situation.
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