“Am I on track?”
By: Cameron Diehl, CFP®
Friends – Of all the conversations I have with my clients, one of the most common questions is some form of: “Am I on track?”
People want to know how they’re doing. Are they saving enough? Have they accumulated an appropriate nest egg for where they are in life? Are they on track to reach their goals?
Unfortunately, those are highly subjective and personal questions to answer. However, there are steps we can take to find the answer.
- Rules of thumb can help – Common rules of thumb can provide a starting point, with many studies suggesting you should save ~15% of your income each year to prepare for retirement. And a recent study from Fidelity provided guideposts along the lines of “you should have 4x your income saved for retirement by age 45.”*
- Your goals make it personal – Unfortunately, rules of thumb are just that. They fail to factor in the infinite variables that make your life your own. What if you want to retire early or continue working part time? What about your goals beyond retirement? How should you be saving for your kids’ college, a second home, your next vacation or potentially needing long-term care? The answer, again, is it depends.
- Clarity is key – To help my clients realize clarity around their standing relative to their goals, we build out intricate plans, quantifying specific goals, setting deadlines, forecasting savings, weighing tradeoffs and factoring in myriad factors including market performance, inflation, taxes and more. From there we run thousands of iterative forecasts to boil it all down to a single percentage probability of success with which we can objectively say “yes, you’re on track” or “no, we need to make some adjustments.”
- It’s a process – However, it doesn’t end there. Staying disciplined and on track over 30-40 years of saving and investing and potentially that long again in retirement is a lot easier said than done. Your circumstances will change. Markets will drop. Tax laws will change. Even the most well-intended investors may waver in their conviction or just get busy with life and overlook something. This is where having a trusted source of advice and support is critical to provide steady guidance, suggest adjustments when needed and encourage you to stay the course when appropriate.
As always, if you would like to discuss anything covered above, please don’t hesitate to call or email me. I’m always happy to help.
*Source: Fidelity Brokerage Services, LLC, June 2017.
Disclosure: Any opinions are those of Cameron Diehl and not necessarily those of Raymond James & Associates. The link is being provided for information purposes only and is not a recommendation or a solicitation to buy or sell any security. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed web sites or their respective sponsors. Raymond James is not responsible for the content of any web site or the collection or use of information regarding any web site's users and/or members.
