One of the fundamental problems I see in “financial planning” is that everything is based on hypothetical outcomes with no interruptions. Meaning if I’m 30 years old, saving $6000/yr. in my retirement accounts, earning an average of 6%, then the outcome at age 65 should be ______. Why? Because my financial calculator tells me so…and the Internet supports my math!
Here’s where that fails. First have you ever seen 2 years in a row where the equities markets get the same rate of return…never in my lifetime.
Secondly, have you ever been able to save the same amount of $$$ for any consistent and consecutive number of years?
Thirdly, what is going to happen in your life over the next 35 years that could divert those retirement dollars away from your retirement accounts and into funding unforeseen LIFE EVENTS.
Let’s list a few that are legitimate. Let’s even say that you’ve followed the instructions in this book, chapter by chapter, and here you are.
- Divorce (Love is grand, divorce is several hundred grand!)
- Aging parents or other family members with need for care (This is huge!)
- Relocation to another city
- Loss of job or career
- Medical emergencies
- Children with special needs
- Lawsuit (above and beyond your liability coverage)
I’m not going to dive into these very much as you know what they mean…and you know how expensive they can be. The bottom line is this. Regardless of how much planning we do together, there will be events that will change some of your best intentions.