Last week we began with the 1st Step of Retirement Planning: Establish Financial Goals. We mentioned several steps which include the what, the how much, the when and the why of each goal.
Today we’ll wrap up Step 1 by talking about the importance of prioritizing goals once they have been established.
The reality is, you may not be able to accomplish all your goals according to how you’ve defined them. So it is important that you prioritize your goals so that if you do run out of resources, you’ll know which goals need to get cut or modified.
That last sentence is really important. Just because you cannot accomplish all your goals does not necessarily mean that some have to be scrapped. Instead of cutting, consider modifying goals.
You can make the accomplishment of goals more accessible by reducing the goal amount or lengthening the time horizon.
For example, you could delay retirement by 6 months. You could reduce your monthly retirement spending goal by $500/mo. Or you could keep your retirement spending goal the same during the first 10 years and reduce it later in the “slow go” years. You are only limited by your imagination and creativity.
For each goal consider creating a how much “range”. The bottom of the range is the minimum amount you need to accomplish the goal and feel like you’ve truly fulfilled your values. The upper end of the how much range is the “ideal” amount you’d like.
As you architect the accomplishment of all financial goals with the resources you have available, you can adjust the actual amount for the goal between these goal “ranges” to make it all come together.
Start by making sure you can hit your minimum goal amounts with all your goals successfully. Once you can, then you can increase the goal amounts toward your ideal amounts until you run out of financial resources. Using financial planning software to make these adjustments and calibrations is fastest and most effective.
If you have any questions please feel free to contact me.