Do you have a personal coach to monitor your retirement spending plan?
1st in a retirement spending series
The purpose of this piece is to address the psychological and motivational actions that tend to sabotage the best plans. Future blogs will focus on different spending methodologies during retirement.
You probably know many people who have a personal trainer to accomplish a weight loss or other healthy goal, but do you know anyone with a personal financial coach for the goal of financial success during retirement? Many people engage the services of tax, legal, investment and financial advisors to provide analysis and advice, but no active partner or coach to guide them in keeping their financial plan on track. After the plan is created, personal, family and outside changes require adjustments. The goals may remain static but future circumstances require changes.
Why do people hire a personal trainer? The answer is simple. Both getting into and staying in shape take hard work and discipline. Gyms profit from selling long term memberships in January to people briefly motivated by New Year resolutions. Once the enthusiasm wears off the membership becomes of little use. When you pay a trainer, however, you show up and do the work because that person holds you accountable and you accomplish your goal.
Professional golfers have the knowledge and the motivation to succeed but they still have a personal coach. A highly trained outsider can often spot mistakes and assist in correcting them. Alone, the pro may not be aware of the cause and fail to correct the problem. In sports and in life, nothing goes exactly according to plan. We adjust our plans for each obstacle, whether it is facing a rival’s powerful defense or navigating changes and uncertainties in the economy. When planning for retirement, why go to the expense, time and effort required to create the plan without achieving the goal of having your money last for your lifetime?
How many times have you watched a sporting event where the losing team suddenly changed their strategy to change the outcome? Doc Rivers, the Clippers’ coach, made an unconventional strategic change in a playoff game against the Oklahoma City Thunder and won the game. All coaches make game-time adjustments but the great ones make them consistently. Phil Jackson of the Lakers and John Wooden of UCLA were among the talented few with the skill to alter the course of a game through strategic player changes or motivational speeches. In sports and life, game-time adjustments are frequently required despite the most meticulously prepared plans. Those serious and committed to their own financial success, make the effort to hire the best coach because failure is not an option.
One of the biggest fears of retirees is outliving their money. This fear may be realized by spending too much, not earning enough or not staying on track with their plan. It can be difficult to determine good tradeoffs between competing spending priorities without the assistance of a knowledgeable coach. There is a constant tug of war between needs and wants, and a good financial coach can remind clients why they chose to spend less on certain activities or downsized to a smaller house so they could help pay for a grandchild’s education or fulfill a desire to take more vacations. A plan designed and implemented based on your core values makes it easy to prevent the spontaneous and emotional spending that can destroy the best plans. A good relationship with a trusted coach who cares about your success can help you focus on your priorities and make the best decisions.
I was first attracted to the financial planning approach over 40 years ago after working for a national brokerage firm. I observed that clients traded stocks without any concept of their long term goals or needs. I witnessed how their good and bad decisions led to success or failure. Like a rudderless boat, they moved at the whim of the tides. At Kaye Capital Management, we make every effort to understand a client’s goals, dreams and priorities in order to assist in planning and navigating their personal road to success.