Financial Worries? Start Planning.
Worry is “an instance or occurrence ofdistress or agitation.”
When we face aproblem or an uncertain future, we ponder every possible outcome in an attemptto prepare for the worst, often delaying action for fear of what’s to come. Formany of us, worry is a short-lived sensation. For others, it can become a wayof life.
We all worry
Want to knowwhat I worry about the most? Time with my kids. My wife and I have 5 youngchildren, and I’m often evaluating how I’m dividing my time within a day orweek to meet their needs, individually and as a group.
Am I spendingmy time evenly with each of them? Am I being intentional enough on how we spendour time? Do they have fun? Do they feel loved? Do they feel fulfilled? I’mconstantly trying to do right by them—a common feeling I’m sure most parentscan relate to.
Interestinglyenough, I’ve never worried about money. When I was growing up, my father oncetold me: “If you have $1 in your bank account on the day you die, you had moremoney than you needed in your lifetime to live.” This quip has forever broughtme perspective, and it’s reinforced one of the things I do best: puttingtogether a plan and sticking to it.
Life isunpredictable, so any plan you make has to be flexible. Comfort with ambiguityis key. Knowing I’ve done what I can and accepting that I can’t control everythingaffords freedom and peace of mind.
So what’s thedifference between how I approach time with my children and managing myfinances? I have a long-term plan with my finances, but with my children, I actmore like a day trader. (I had this epiphany as I wrote this blog, and I’vealready begun changing my approach and creating a plan.
Confront thescary statistics about retirement savings
If you’re likemost people, you’re concerned about your finances and saving for retirement.It’s understandable. I often act as my clients’ coach and help them confronttheir worries in a productive way, which has given me insight into howheadlines and statistics can paint a cloudy picture of the future.
Here are a fewstatistics that may cause you to worry—as well as a few thoughts on how toovercome the fear by taking action and developing a plan.
Only 1 out of10 workers has prepared a formal financial plan*
Without a plan,you may be more prone to react to market events, and you might even make rashdecisions. A plan provides perspective, brings clarity to your currentsituation, and shows you how to make changes to your spending and savinghabits. It can give you knowledge and confidence to address all of the whatifs?
Vanguard can help—or you can use DIY resources. Either way, step one is to takeaction and start planning.
42% ofAmericans have saved $10,000 or less for retirement**
This statisticsuggests a significant number of Americans aren’t on track to meet theirretirement goals. That shouldn’t be surprising given the plethora of potentialobstacles: Pensions are less common for younger generations, and health carecosts continue to rise. You need to figure out how to put your kids throughcollege, but you might be paying off your own student loans at the same time.
How do you juggle these goals? This Retirement Income Calculator canserve as a quick pulse check to see if you’re on course. If you’re off track,you can take a few simple steps to get right back on the road.
- Save as much as you can, as often as you can. If you’re years away from retirement, you’ll likely benefit from the compounding effect.
- Stay in the workforce longer (more on that in a moment) or decrease your living expenses. This may be an especially viable option if you’re close to retirement.
- Plan. Focus on what you can control and what’s important to you—planning provides perspective on what you can do to meet your goals.
Two-thirds ofindividuals are disengaged at work†
If thestatistics above apply to you, you may need to keep working longer than youwant to. And if you’re like me, you want to havefun and enjoy what you do.
But if your jobfeels like work, consider chasing the traditional American Dream anddoing something you love. Continuing to work doesn’t necessarily meanpostponing your retirement plans to travel the world, golf, and learn newhobbies. Working longer may actually help you do those things sooner (thisis where a financial plan can help).
If changingcareers isn’t for you, consider a flexible work schedule, go part-time, or stayon as a consultant. Research shows that people who work longer also benefitcognitively.
And workinglessens the strain on your retirement savings while allowing you to stayenrolled in your company medical plan.
From myperspective, the key is to love your work. When you enjoy what you’re doing,you engage, you feel accomplished, and you bolster your retirementsavings.
Partingencouragement: If you plan, peace will come
My plan torotate weekday evening time with each of my kids and schedule weekly “datenights” has brought structure, set realistic expectations, and replaced chaoswith comfort in our home. The same organized, disciplined approach can benefityour financial life too.
Take action.Learn the reality of your situation. Stop worrying, start planning.