According to a study from AARP, 83% of Americans have at least some form or fashion of a plan for death. This is really a surprisingly high number given that somewhere around only 50% of baby boomers even have a simple will.
However, we pose a very different question...rather than asking what percentage of Americans have a plan for death, why aren’t we asking what percentage of Americans have a plan for living?
A plan for living is called Retirement Planning...a plan for dying is called Estate Planning...combining them both is called Life and Legacy.
It’s critical for both employees and employers to define your purpose and the “why” before building your plan. Whether you’re selecting financial products (stocks, bonds, mutual funds, annuities, real estate, etc.) or adjusting your existing plan, setting an intention will alleviate stress and anxiety when it comes time to make a decision.
If you and your employees have a rock-solid purpose defined, then it will drive the design of your life and legacy plans because it will be all about your unique needs and goals. Here are a few key points for you and your employees to consider as you plan for a prosperous future.
Our financial lives can be broken down into 3 different phases:
Think of it as taking on the challenge of climbing Mt Everest. The Accumulation Phase is like the ascent, the Spend-down Phase like the decent, and the Legacy Phase is the stories told about it for years to come. For all phases, it’s important to have a tax balance approach. This means we’re paying attention to the tax consequences of our decisions today and in the future. Where are tax rates today in comparison to where we believe they will be in the future? Additionally, putting the money aside (aka savings) is the biggest hurdle, but once we do set it aside, can we really afford to put it under a rock for the next 5, 10, 30 years? The answer is no, and the longer the time horizon, the more important each percentage rate of growth matters. Don’t forget, use the Purpose – Planning – Product philosophy as your compass.
Let that inner-child out right now and dream out loud for a bit. What does your ideal first day of retirement look like? What time does the alarm go off (or does it at all)? Where are you? What scene do you take in while sipping that first cup of retirement coffee? What will you wear that day; flip flops, boat shoes, ski boots, or are you barefoot? What color is your house, what’s the weather like, and who’s with you? How are you feeling?
Seriously, dream about it and write everything down. OK, this is fun and all, but what’s the purpose of all this warm and fuzzy feeling stuff? A budget- a retirement budget.
Hopefully, we’re already living by our budget now (if not, START today!) It is very difficult (and probably unrealistic) to build a retirement budget out of thin air and expect it to be accurate. Yes, our retirement budget is best built on the foundation of our pre-retirement budget. Some expenses will go away entirely, other expenses may go up (hopefully some fun ones!) and some new expenses that we’ve never had prior may need to be added. Regardless, the budget in retirement is mission critical. It should be aligned with your vision and values, and it becomes your playbook for what are hopefully the most joy-filled years of your life.
Share these dreams, plans, and wishes with those most important to you. For whatever behavioral and emotional reasons, we tend to suppress way too many of our feelings, visions, and desires around money. Take a few people out for coffee and share your new approach to building the life and legacy of your dreams. At bare minimum this means your spouse, your executor, your beneficiaries, your pastor, your financial planner, and your accountability coach. There are many reasons why this makes good sense. Just to name a few…take your executor to an Executor’s Boot Camp (offered through the Foundation for Financial Wellness) and get them in shape.
Additionally, it’s great to begin speaking these wishes into reality; your accountability partner will love to know what’s on your heart and help keep you on track. And one last one, would be the old load bearing truth of “If you want to master something, try teaching it.” As you begin putting spoken words to your heart-felt “why”, you’ll begin to find holes in your thinking, gaps in your assumptions, and misunderstandings from your loved ones.
Wouldn’t you rather work on these things now, rather than leaving it up to interpretation once you’re gone?