Monthly Archives: August 2013

Retirement Planning: When You Haven’t Tracked Your Spending

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Planning for retirement is not a subject you dwell on every day until you realize it’s closer than you think. However, there are various components for you to consider when planning for your “golden years.” An important piece of this planning requires you to calculate your current spending so you can make wise financial decisions for your retirement years.

How much do you spend?

Some families track their spending using software, online tools, a homemade spreadsheet, or simple paper and pencil. If you have been tracking your spending, congratulations! You have some solid spending history to use when estimating how much you will need to spend each year to pay your bills and do the things you want to do to enjoy your retirement.

What if you do not track your spending?

Many families that are easily able to pay their bills and accumulate healthy balances in their savings and investment accounts have never felt the need to track their spending. However, as they get within a few years of retirement they realize they do not have any spending history to use for projecting whether they can afford to retire soon. They do not know if their investments will provide enough income to support them with the same lifestyle they have always enjoyed. Fortunately there is a solution.

How to calculate your current spending?

Before you decide to turn off your income from employment, you want to be confident that you know how much money you need for retirement. What you don’t want to do is not have enough income at the time of retirement to provide for you and your loved one. Therefore, it is best to use pure facts when calculating your current spending.

  1. You make A.
  2. You give B to the government for taxes.
  3. You save C.

The rest is what you spend.

A – B – C = what you spend

It’s that simple. Don’t let the fact that you have not been tracking your spending delay your retirement planning. You can use this simple calculation to estimate how much you spend currently. And track your spending going forward so that you can more accurately estimate your spending needs in retirement.

Tracking your monthly spending today is important to do in the last few years before retirement. If you haven’t started, it’s okay. Start now. When you have an accurate picture of your expenses today, you’ll be better off in your future.

 

 

2013 Garrett Planning Network Retreat

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The Garrett Planning Network 13th Annual Retreat was recently held in Kansas City, Missouri. I am a member of the Garrett Planning Network. It is a group of about 300 financial planners that offer financial planning on an hourly basis, each member owns their own firm. I have written about the Garrett Planning Network before.

I attended the conference and earned continuing education credits by going to various educational programs, which I need so that I can keep my designations and licenses such as:

  • CERTIFIED FINANCIAL PLANNER™
  • CHARTERED RETIREMENT PLANNING COUNSELOR℠
  • NAPFA Registered Financial Advisor

During the four day conference I attended various educational programs such as:

  • State of the Industry
  • The 7Twelve Portfolio: A Better Balanced Portfolio
  • Long Term Care Planning – Past Present Future
  • Estate Planning Update
  • And others

Ron Rhoades, JD, CFP ®  of ScholarFi, Inc., gave one of the Keynote addresses on the state of the Industry:  Will Fiduciary Duties be expanded – by the DOL or the SEC? In the fast-paced presentation, professor Rhoades covered various trends about the CFP Board, marketing of financial services and future effective business models.

Craig L. Israelsen, Ph.D. gave a keynote address on the 7Twelve Portfolio: A Better Balanced Portfolio. Laurence B. Siegel, another keynote speaker, spoke on Wake up and Smell the Coffee! Investors are Poorly Prepared for Retirement – A Balance Sheet Solution.

Throughout the year, the Garrett Planning Network, has three or four conference calls each month.  One of the most beneficial outcomes of my annual trip to this retreat, is getting together with this group in person. On Thursday I was with a group of Garrett Planning Network members and Sheryl Garrett as Sheryl rang the closing bell at the BATS Global Markets stock exchange, the third largest exchange in the world. We took a tour of the exchange.  It was inspiring to learn about the volume of trades that goes through there.

Another a highlight for me, is that I met Gail Marks Jarvis and she signed a copy of her new book for me. She is a very knowledgeable journalist for the Chicago Tribune and really roots for the consumer.  One discussion point that really connected with me was something she mentioned at the book signing table.  She talked about the fact that investors do not care about percentages they care about dollars.  Their dollars.  I agree wholeheartedly.  It is something that I have kept in mind for years when I talk with someone about what allocation model is best for them.

Garrett Planning Network is a terrific group of professional financial planners who, like me, work with clients on an hourly basis.  We share ideas and act as a resource for each other all year, so it is so nice to get together once a year and see each other again.