Retirement: Defining Peace of Mind

11/04/2019 - Retirement
Retired couple on beach

Building a retirement plan is not a one-shot deal—at least not in my office. Crafting a plan that fits my clients’ needs takes multiple conversations, careful observation, and a personalized approach. But for that first meeting, I have a primary goal: to understand what peace of mind means to them. 

I don’t use the financial services industry’s generic risk profile questionnaire to do that. Why? Those questionnaires don’t account for the fact that emotions drive decision making. Without that important insight—along with the potential for clients to misunderstand some of the questions—it’s all too easy to end up with an incorrect risk profile, and thus, an inadequate plan. 

Instead, I apply a set of metrics that I have developed over more than three decades in this business and meetings with literally thousands of potential clients. My metrics provide me with everything I must know to do the best possible job for the client, whatever their circumstances may be. They take into account the reality that, while clients’ concerns are often similar, their situations are seldom the same. 

To determine how to establish peace of mind, I start by asking about their biggest fears.  When I know what keeps them up at night—the thought of running out of money, health issues, the cost of fulfilling their bucket list, and more—I can determine how to address it. 

Next, I ask how much retirement savings they would need to feel financially secure. Often, people don’t know. They have a number in their minds, but it’s not based on anything concrete. When we drill down and look at lifestyle, purpose, family obligations—the whole nine yards—that amount may be more or less than what they quoted. But here’s the thing: we actually figure it out

Another crucial question: What amount of income do you need to live comfortably? This can be tricky—we’re not talking about how much they need while they’re still working and contributing to a 401k. We’re talking about how much they need in retirement, when their circumstances may be different. 

Without answers to these questions, I can’t devise a plan—not a good one, at least.

Of course, that doesn’t stop many firms from doing so anyway. Some even use robots. Answer those generic questions, push a couple of buttons, and voila: your retirement plan is done. That may be just the right solution for a fast-food drive-through, but it’s certainly not the way to go for retirement planning—particularly if peace of mind is the goal. And it should be. 

My book, You’re Retired. Now What? provides more insight on creating a retirement plan that prioritizes peace of mind and personal success. You can learn more about it here.

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Disclaimer

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity.

This blog does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her advisors. It is important to review investment objectives, risk tolerance, liquidity needs, tax consequences and any other considerations before choosing an investment style or manager.

This material contains forward-looking statements, predictions and forecasts (“forward-looking statements”) concerning our beliefs and opinions in respect of the future. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

Investing in securities, including investments in mutual funds and ETFs, involves a risk of loss which clients should be prepared to bear, including the risk that the full investment may be lost. There is no guarantee that you will not lose money or that you will meet your investment objectives.

Dividends are not guaranteed and will fluctuate. Dividend yield is one component of performance and should not be the only consideration for an investment. Investment advisory services provided by GW & Wade, LLC 93 Worcester Street, Wellesley, MA 02481.

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