No one can defensibly calculate what your future life will cost or what it is worth. But with the right guidance and partnership you can have the tools to understand your financial decisions, leverage your personal assets correctly, and develop the free cash flow (spendable money every month) to reach your goals.
I started working in retirement planning in the early 90s, fresh out of college with big dreams of helping people reach some of their most important financial goals and dreams. Retirement planning was a relatively new topic at the time as pensions were slowly fading into the background and Americans were expected with higher frequency to take responsibility for their own retirement futures through investment accounts like the 401(k), IRA and eventually, the Roth IRA. It was an exciting time to help people reach toward what I came to call “Financial Independence”.
What do I mean by this? At the most basic level, it is the day work becomes an option. You may choose to continue your career, move on to a new one, or perhaps dabble in consulting or other freelance work, but from a financial perspective: you’re free. I define financial independence as having enough free cash flow and enough investment reserves to cover your future expenses, both planned and unplanned. When you start thinking about all the things this could include, this becomes a complicated bit of calculus. Future long-term care costs are difficult to predict, your spending will fluctuate over time, and major outlays for those once-in-a-lifetime experiences you’ve been saving up for all these decades can have a massive effect. It is because of all of this that only one in five pre-retirees feel confident about their ability to retire. (2016 study by DST Systems). This lack of confidence in their future financial independence can be debilitating, causing them to invest in poorly designed investment products, stay in caustic job situations too long, or add relational strain to the retirement decision-making between spouses.
There is good news though: this is a solvable problem. You can’t solve it by getting on some company’s computer-generated green line and there’s no one magic number for you to reach that can’t fail. I remember when a large multi-national insurance company (trying to sell annuities) did an ad campaign featuring people carrying around giant representations of their retirement number, and touting their financial products that could both give you that number and assure you of its reliability. This was before the age of hashtags, but I can bet that they would have called it the #retirementnumber campaign, if such a thing existed. I knew then what I know now: no person’s retirement can be boiled down to a number; the solutions to financial independence are just too personal for that.
It’s personal. That’s one of the central tenants every one of our trained financial advisors at Trilogy are expected to live by. They are expected to understand that retirement is a long series of decisions (both before and after), sometimes lasting 30 years or more. Is there any other 30-year series of decisions affected by complex challenges and opportunities that you would try to boil down to a number? Imagine telling someone who had their first child the exact cost that little baby would require for the first 30 years of its life. We can tell you on average what the first 30 years of life costs, but it is an act of pure, impersonal arrogance for us to try to tell you what the cost would be FOR YOU.
Instead, we coach our clients to understand the probabilities and long-term effects of their decisions. You should have a central interface where you can see all of your major financial decisions and their potential long-term impact. You should know how each dollar affects the others and work with a Decision Coach to develop a long-term strategy that plans ahead for obstacles and is positioned for opportunities.
You are not a number.
No one can defensibly calculate what your future life will cost or what it is worth. But with the right guidance and partnership you can have the tools to understand your financial decisions, leverage your personal assets correctly, and develop the free cash flow (spendable money every month) to reach your goals. In the end, the retirement decision is one of the most personal and meaningful decisions you’ll ever make. If you treat it like simple math, you may just miss all the possibilities that are in store.