Retirement income planning requires flexibility but when the goals and objectives are changing without reason, there might be some deeper issues at play.
In this episode of the Money Wisdom podcast, we want to talk about the most common ways that people shift the goalposts in their retirement planning and why it occurs. Understanding what happens and the reasons behind it will give you a better grasp of why proper planning can keep you on track.
The first thing people change is the amount of cash they’re going to need for retirement. It might be one number this year and a completely different amount the next. The problem is that the needs haven’t typically changed, but a person’s feelings about the amount they are comfortable with have. As it continues to shift, many people end up with much more cash than they actually need and that can be a problem over the long term.
The best part of a financial plan is you can put in guardrails to help you stay within the appropriate range for your needs. That way when you get over a certain amount, you’ll know it’s time to rebalance and invest that money. When you dip below it, then it’s a signal to increase your savings.
The next goalpost that often moves is the amount of risk you’re taking on in your portfolio. When you move that line in the sand, you’re left with no standard to measure yourself by. Think about the way people think when the market is going up. A larger and larger percentage of your overall portfolio becomes exposed to the market but people are often hesitant to rebalance because of the hope for larger and larger gains. The result is you find yourself taking on more risk than you originally planned.
The last one we discuss on the show is the retirement date. Pretty much everyone has an ideal age or date in mind as they move through their career. We will establish a goal for retirement but that ends up changing as you get closer to that retirement date.
We see this all the time, and it happens for a number of reasons. Sometimes it’s emotional, sometimes it’s because you lack confidence in your financial future, and other times your worth is tied up in your work. Sure, you don’t have to be rigid with your date, but you need to examine the reason why the goals are changing and address those concerns directly.
For this and everything we talk about on the show today, proper planning goes a long way toward alleviating these issues. Make sure you take advantage of our Money Map review process to get the proper goals laid out so that you can keep your retirement on track.
0:31 – How much cash do I need?
2:38 – I need to reduce my risk but when to do it
3:59 – Picking your retirement date
6:19 – How retirement planning helps alleviate some issues
8:37 – Take the next step
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