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The Goal-Setting Guide to Getting the Retirement You Want What do you want your life to look like when work is out of the way? Here’s how to plan for the life you want and how to ensure you have the means to live it. By Barry Waldman CTW Features There is a scene in Lewis Carroll’s Alice in Wonderland that applies to retirement planning. It begins with Alice, arriving in Wonderland, seeking directions from the Cheshire Cat. “Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don’t much care where–” said Alice. “Then it doesn’t matter which way you go,” said the Cat. “–so long as I get SOMEWHERE,” Alice added as an explanation. “Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.” If you were to walk through the door of almost any financial planning professional, the first thing they would do is begin asking questions. And one of the first would be, what are your goals in retirement? In other words, where are you trying to “get to.” Do you want to move to the beach and enjoy your mornings sipping coffee and watching the sun rise over the water? Do you want to play golf every day and spend time with the grandkids? Or maybe you’re looking to travel the world. Your goals will determine your retirement plan. The reverse is true too: how you plan for retirement goes a long way towards determining what goals are realistic. Your dream to build an oceanfront estate in Bora Bora and jet to the States for Thanksgiving and Christmas might require some downsizing if you haven’t maxed out your 401k. Only once you’ve determined where you’re attempting to go, can you determine what road will get you there. Experts say that continuing your current lifestyle will require roughly 80 percent of your current income. That is a good rule of thumb, says Bob Liggero, owner of Financial Prescriptions in Jacksonville, FL, but you may not be a thumb. “When people first retire they’re in the go-go years. When they’re 70-75 they’re in the slow-go years. And then after 80 they’re in the no-go years,” he said. “If you start off needing 80 percent you may end up at 50 percent.” Liggero advises his clients to consider that Medicare will not pay for all health needs, and doesn’t cover long term care at all. The average retired person will spend about $200,000 on health care during their years of retirement, or roughly $10,000-a-year. That, the crippling cost of long term care, and the likelihood that taxes will have to rise as -a Continuing Care Retirement Community- (309) 557-8000 LutherOaks.org the national debt balloons, have to be accounted for. Like most financial planners, Liggero employs a worksheet that helps clients evaluate what is most important to them. Based on the priorities clients identify, and the assets they have, he can advise them how many of their goals are realistic. He might advise them to work longer, save more or trim their expectations if their savings and desires don’t match. For younger people, retirement goals may be vague. Palmer Stokes, a development manager for New York Life Insurance Company in Charleston, SC., says most people under about 45 are not saving for specific goals, but for an idea – of financial security and freedom in retirement. It’s critical for people in that situation to ignore current conditions and just keep saving. “The Recession turned 401Ks into 201Ks,” he quipped. But for those who stuck with a savings plan, their portfolios have bounced back, and then some. Generally speaking, if you’re years away from retirement, you want to be heavily invested in the stock market and rooting for stocks values to fall, says Liggero, so that you’re buying low. As you get closer, you switch from offense to defense, striking more of a balance with bonds and cash, so you’re not redeeming devalued assets. His analogy: “Don’t fumble the football in the end zone.” Financial planners all have stories of clients whose dreams outpaced their means. Stokes had one 32-year-old client with a young family who was planning to open his own business and retire at 50. He had no savings and would have to invest heavily in equipment while enduring a haircut in his income for a couple of years. Stokes had to deliver the bad news that the client’s goals weren’t realistic. “That was not a very comfortable conversation,” he remembers. But the client listened, and drew up a budget at Stokes’s suggestion. It made clear the need to push back his projected retirement date and save some cash before starting. There are dozens of considerations in retirement planning; e.g., the state of Social Security, tax rates, income streams, investment vehicles and more. But financial planners agree on the basics: start early, save continually and build aggressively when you’re young, then determine your goals, adjust your tactics and plan for the unknown as retirement approaches. Above all, says Liggero, get to it. “If you fail to plan, you’ve planned to fail.” It may be a good time to consider a maintenance-free lifestyle and confident plan for the future. Luther Oaks would like to help you.