Getting Bob and Betty on Track
Fortunately Bob and Betty did not fall into the common trap of thinking that the seemingly big number on their 401(k) statement meant they were in great shape. Like many folks who come in for a checkup, they were not totally surprised by the results and said, “That’s what we were afraid of. What can we do?”
There are three steps Bob and Betty can take to reach their goal:
- Change their asset allocation to hopefully generate a higher rate of return on their investments.
- Save more.
- Retire a few years later.
Bob and Betty did the right thing by addressing each option independently. They did not want to risk taking a step backward with their current nest egg, and preferred to forgo a bit more yield if it meant taking on more risk.
In addition, they looked at their current lifestyle and made a commitment to spending less, saving more, but still enjoying life. The more they made up the gap, the sooner they could retire.
They also realized that they might have to work a bit longer, but that was not a decision they had to make today. They simply needed to acknowledge that it is a likely possibility. And they understand that their investments have more room to grow. Their life expectancy after retirement will be longer, and their health may remain better if they have a place to go each morning, assuming the work is not stressful. They also discussed the possibility of part-time jobs doing something fun, as opposed to continuing with their current careers.
When Bob and Betty left, they booked an appointment for next year’s checkup. They anticipated following their plan and hoped to be closer to their goals next year.
The Second Opinion
We would be remiss if we did not mention that a second – or even third – opinion is just as important for financial planning as it is for medical issues. Asking two or three advisors to give you their recommended game plan could be a good way to identify useable information in the forest of financial noise. Second opinions are worth the time and effort.
If your medical checkup shows some issues, then diet, exercise, and maybe medication changes are key. If your financial checkup shows some issues, saving more, spending less, better asset allocation, and retiring at a later age are all changes worth considering to optimize your financial health.
Folks, it’s Dennis here again. If you’d like to find out more about choosing the right financial advisor, please check out The Financial Advisor Guide, a special report we published as a result of the research we did with Jeff White.
You can either just get the report or if you’re not already a subscriber, you can access of a copy of it – along with our current issue, all of our archives and special reports, and my book – by signing up for our risk-free, 90-day trial subscription. It’s a great way to begin your financial checkup today. And as a special bonus I’ll share with you our simple strategy for creating monthly income with conservative investments. It’s a core part of our portfolio and is being used by thousands of investors just like you. Click here for brief explanation with all the details.