Donald E. Askey
Newburyport Daily News
---- — What good is planning? Life is so unpredictable. The economy, jobs, the stock market, food costs, gas prices, health insurance. How meaningful is any plan in face of all of these unpredictable aspects of our lives?
Not everybody sees the value in a financial plan. Some think they don’t have enough to make it worth having a plan. Some have lived without ever planning, except maybe a vacation here or there. The fact is that only one fourth of American households have any interest in making any kind of financial plan. You may be comfortable among the majority of non-planners.
Many who have already retired will say the time for planning is over. What’s done is done. We collected so many marbles and the time for collecting more marbles is past. Retirement may be the most important time for a plan: Many in retirement overspend and risk running out of money. Many others underspend what they’ve accumulated and remain uninformed about how to use more of their savings or their Social Security benefits for a fuller life now.
In my planning practice I primarily encounter folks who do not see how they might reduce their anxiety over money—folks who do not think their account balances are high enough or will stay high enough for them to enjoy a comfortable life at peace with the money thing.
Over the years the families and individuals I have coached through the process of imagining a future free of money anxieties experience two outcomes. One, they overcome their regrets about past money decisions. Two, they come to realize that the future is unpredictable, but some aspects of their personal financial future are plannable and under their control.
Financial plans are dynamic documents. They need to be revised or replaced as those unpredictable events play out in our lives, such as, divorce or death, losing a job or gaining a grandchild. Just because these types of events are unpredictable and beyond our control is no reason not to focus on what we can control financially.
A good financial plan will detail an appropriate glide path for saving (pre-retirement) and an appropriate glide path for spending (in retirement). Rates of saving and rates of withdrawal will be articulated and monitored at least once year in order to take into consideration any events beyond our control that might impact on the assumptions supporting the glide paths. A good plan also carefully weighs the risks your plan might blow up or fail. Among those risks might be investment risks, uninsured risks that are insurable, overspending, underspending, debt, or the lack of appropriate and up-to-date final documents (wills, trusts, powers of attorney, proxies).
A good plan is a flexible plan, one that can bend in the face of life’s unpredictabilities. A good plan is a good road map customized for the general course you want to take. A good plan is clarifying and liberating. A good plan provides financial peace of mind. A good plan allows you to live comfortably in the present.
Donald E. Askey, a fee-only financial adviser and planner at Oakmont Partners LLC with offices in Amesbury and Boston, can be reached at firstname.lastname@example.org .