We all have the goal of getting to retirement, having plenty of money, and doing the things we love. The problem is, a lot of folks don’t set a proper financial plan to reach that goal, or have unrealistic expectations of what retirement will be like. Everyone wants to be a millionaire, travel the world, and eat out every meal, but too many fail to realize that just to have a “normal” retirement, it takes careful and attentive planning. Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP®, shares her thoughts on financial goals and recommends a system to achieve those goals that are essential for you to obtain financial security and achieve the ultimate dream of a fun and relaxing retirement.
To assist you in setting better financial plans, here are five key points that Eleanor suggests you should apply in the process of setting your own financial goals.
1. Setting realistic and achievable goals – Do not set goals that you know you are not capable of achieving. A good example of an unrealistic goal is to retire with $10 million in assets when your salary is $50,000 per year.
2. Short-term and long-term plans – In general, short-term plans are needed for you to start initial savings and set deadlines to clear up your debts and obligations. Long-term plans, on the other hand, capitalize on your savings and use it to increase wealth.
3. Prioritize your goals – Everyone will have many financial goals, but smart people will prioritize their goals. When you are faced with decisions like saving for a vacation home or paying down your mortgage, be sure you choose the one that will have more future benefits. Always seek the help of professionals if you are uncertain about goal prioritization.
4. The value of time – If you invest $1,000 today, for 20 years at 5%, you will have $2,653in the year 2032. However, if you wait just 5 years, and only get to invest for 15 years, you’ll have almost $600 ($2,078) less in 2032. So start saving now!
5. Goals need to be flexible – Set backup plans or alternatives for each goal that you have set. Factors like market conditions and illnesses can take a toll, so have something to support your initial plans.
By taking into consideration the above five points, you’ll be well on your way to financial freedom and an enjoyable retirement!