By FPA member John F. McAvoy, CFP®
Last Updated: May 16, 2011
#10: “I’m too busy”
So many people want to plan for a better retirement, but they don’t have time. They think they’ll take care of it tomorrow or the day after that…and before they know it, several years have gone by. Inertia is the hardest thing for most people to overcome. Stop procrastinating and start planning today.
#9: “It’s too soon”
It is never too soon! Retirement planning is about making decisions to help you become financially secure. That means that you need to make a conscious decision to spend less than you earn and limit your debt. This is the surest way to financial independence and it is never too soon to start that process.
#8: “It’s too late”
It is never too late! There might be options available to you of which you are unaware. Income generating strategies are constantly evolving and there might be a strategy which you have not yet considered. Even if you have a plan in place, it is prudent to review it on a regular basis.
#7: “I don’t need to”
“If you fail to plan, you plan to fail.” The financial planning process can uncover many potential problems of which one may be unaware. For example, a proper financial plan will examine your cash flow, your insurance coverage, your investments, your estate plan and how taxes effect your financial decisions in all of these areas. The future is always uncertain, but a good financial plan enables one to examine their financial security and develop a contingent plan for those unexpected events.
#6: “My goals are too big”
Many people set goals that are way over their head. This can overwhelm them and prevent them from taking action. Break your big goals into smaller ones. It’s like walking up a set of stairs. There is no way you can leap to the top! Each step you take, however, gets you to the top of the stairs. A financial plan can work best when you implement it incrementally over time.
#5: “My finances are a mess”
This is one of the hardest things for many people to face — being in denial and wishing that one’s financial situation will solve itself. There are many Americans who have had several jobs over the last decade and have two, three or more 401(k) accounts. Taking the first step to simplifying your financial life may help eliminate some of this stress. A proper financial plan helps you organize your finances and also provides a track for you to follow.
#4: “The Government will take care of me”
Many Americans, especially younger Americans, already recognize that this is not a viable solution. No one knows what government benefits will be available or if they will be modified compared to today. Once again, a prudent solution is to plan for the worst case and then enjoy the benefits of your planning if it does not occur.
#3: “I have enough saved in my 401(k), I’ll be fine”
Many Americans have not considered the next step for their retirement program. That is, how will one generate income without running out of assets during retirement? Consideration must be given to the potential effects of inflation, taxes and individual longevity in comparison to your retirement income.
#2: “I don’t want to think about it”
The biggest obstacle to financial success is our own behavior. Ignoring the reality of the situation won’t solve the problem. Taking the first step toward financial security starts with the gathering and analyzing the facts. It is not easy, but the rewards can be satisfying.
#1: “I don’t know how”
There are people who love the tiny details of their financial situation and are not intimidated by the prospect of delving into those details. Most people, however, don’t have the time or temperament to understand their financial situation. That is why an objective analysis by a financial planner can provide a window into your financial life that will help you to achieve the goal of financial independence, also known as a successful retirement.
FPA member John F. McAvoy, CFP®, is a principal with Waterstone Retirement Services in Canton, Mass. Securities offered through Investors Capital Corporation, Member FINRA/SIPC.