Most people want to know: “Do I have enough to retire?” The answer is always the same, “It depends…”
It depends on how much you have saved; what your sources of retirement income are, and when you will stop working. Yet the most important question is not, “Do I have enough to retire?” The most important question is “How much do you spend now and what will you spend in retirement?” Believe it or not, most people do not know the answer.
This piece of information is vital to the development and success of your financial plan. I relate your lifestyle needs to a heartbeat. Life stops when a person’s heart stops beating. You can imagine that if you don’t have enough money to support yourself in retirement, your life will feel as though it has stopped. You will feel doomed and be limited in the things you can truly afford. You certainly don’t want that.
One thing is certain; you can’t borrow money to retire. “I’d like $250,000 for my retirement, please.” This may sound like a grim reality. The truth is you could be living on less in retirement if you don’t take the time to calculate what you spend today.
In the summer of 2013, David Aston’s column, How Much Money will You Need to Retire, appeared in MoneySense. In my client meetings, the chart below is used to quiz people when they don’t know how much they spend. I ask if they can pick themselves from the different classes: Basic, Average Middle, Upper Middle, or Deluxe.
The truth is until anyone actually tracks their expenses, they feel clueless. A couple said they thought they spent only $2,000 each month until they tracked their expenses. Can you imagine the shock when the total was closer to $5,000? For most people, the shock comes when they realize how much money is going out in comparison to money coming in from their earnings.
Hang in here as I prepare to swing totally off topic for a few minutes.
Kevin Hall talks about the origin and significance of the word “Coach” in his book, Aspire. Here’s a little history lesson.
In old Hungary, along the Danube River between Budapest and Vienna, there was a village by the name of Kocs that produced the world’s finest horse-drawn vehicles. Skilled wheelwrights fashioned these conveyances with spring suspension to comfortably carry royalty over the bumpy river road that connect the two great cites. These carriages borrowed their name from the small township where they were skillfully designed and came to be known as “coaches”.
Originally crafted for aristocracy, coaches carried important people to their desired destination in luxury and ease. Their compact, sturdy, and elegant design far surpassed any mode of transportation that had come before, and coaches soon became the rage of fifteenth-century Europe.
Over time, other forms of transportation adopted the term “coach.” Passengers traveled far reaches of the western frontier of America by stagecoach and railway coach. In Europe a motor coach became synonymous with a luxury car or travel bus.
But however far-reaching and prevalent the word has become since the first coach rolled out of production in Kocs, the meaning has not changed. A “coach” remains something, or someone, who carries a valued person from where they are to where they want to be.
The reason I shared the meaning behind the word, “Coach”, is for you to think of a CERTIFIED FINANCIAL PLANNER® professional as a coach - - your coach. When your coach says it’s important to track your daily spending, it’s not because you have nothing better to do. You need to be aware that this is where the answer lies to the important question, “Do you have enough for retirement?” You are a valued person. As your coach, I want your retirement to be enjoyable for you.
The different titles for coach (i.e. guru, mentor, guide) all describe the same role as Kevin Hall points out.
One who goes before and shows the way. Coaches point out the sharp turns, potholes, perils, and pitfalls of the road being traveled. They steer clear of dead-end streets and unnecessary detours as they safely navigate us to our desired destinations. Whether they are leading or teaching or showing or guiding or mentoring, they are coaches. And they are indispensable in helping us find our path and purpose.
I love the parallel of a CERTIFIED FINANCIAL PLANNER® professional and a coach. Juggling your finances to accomplish your goals and dreams can be challenging. That’s why having a financial coach makes your life journey successful. Together we will find the answer to determine whether you have to: work longer, save more, or spend less in order to have a successful retirement. OR maybe simply discover that “Yes, you do have enough.”