your retirement goals|
Sometimes with so much emphasis placed on savings and investments,
IRAs, mutual funds and pension plans, it's easy to forget that there
is a flip side to this particular coin: expenses. You can control
them. So maybe that beach house in Maui needs to be a beach shack
... or a condo up the road ... or a week once a year in a hotel.
If you pay off your mortgage early, you'll have more options. You
can live mortgage-free or perhaps sell your home, downsize and put
the equity into an annuity that pays an income stream for life.
"The traditional mainstream financial speech
is, if you want to retire you have to save as much money as possible, so you add
money into annuities or 401(k) plans to build up your assets," says Collins.
"That's important, but just as important is being able to reduce the amount
of expenses you're going to have in retirement. And that can mean paying off your
debt in retirement. It means you're controlling any expenses that may come up
during the year."
How do you go about being realistic in fine-tuning your retirement
Obviously, if you can't pay your bills now while living
in a two-bedroom apartment in the suburbs, a Hawaiian beach house
is a pipe dream. Again, perhaps it all has to do with setting priorities.
How many people give much thought to what really matters to them?
Collins says that instead of asking a client such
vague questions as, "How much money do you need in retirement?"
he asks a series of provocative questions that force the client
to think things through.
than trying to build your life around your money," Collins says, "let's
try to build your money around your life. We ask a number of questions, but all
around the premise of what's really important to you."
Question No. 1: If you went to the doctor and he told
you that you had five years to live, what would you do in the next
Question No. 2: If you went to the doctor tomorrow
and she said you have one day to live, what are the things you'd
regret not doing in your life?
Collins says, "We find that really helps spur
the goal conversation, because what comes out are the things that
are really important. It's a big step in the whole process of trying
to develop these goals."
And once your real goals are on the table, you can
back up and determine how much they will probably cost. Once that
has been estimated, you can then create a plan to reach your financial
-- and retirement -- goals.
It's also important to keep in mind that while a dearth
of money could certainly make for an unhappy retirement, a beach
house on Maui may not be a real source of happiness. Happiness might
be good health, family, friends or activities that engage and entertain
not always about money," says Randles. "Lots of times it isn't. It's