|Robert Stachura, CFP, has spent the last 15 years successfully
mapping out financial plans for his clients. Based in Millersville, Maryland,
with clients in several states, Robert knows that building a strong and fruitful
financial future is a team effort. He partners with his clients to craft the
best route, the most productive plan, so they can reach their destination right
when they want to. For more information on Robert Stachura go to
www.theretirementadvisor.org or call 410.729.4375.
Jim Barton, age 52, had his dreams.
After 20 years in the military, he began a second career with the
federal government and was looking forward to retirement at age 55.
He and his wife Karen, a homemaker, were planning to travel more --
to their second home in Canada and throughout the country in their
camper. In addition, Jim hoped to help his 3-year-old granddaughter
with college expenses down the road. Jim and Karen were living quite
comfortably, enjoying their camper on weekend trips and visiting
their second home in Canada several times a year for longer
vacations. Looking forward to his retirement at 55, Jim figured that
between his pension and distributions from his federal Thrift
Savings Plan, he'd make out just fine financially.
He figured wrong.
A lifetime of steady employment, with
retirement benefits, was not enough to put Jim into retirement at
age 55. With little equity in his house after refinancing several
times, a sizeable loan left on the camper along with those for two
pick-up trucks, credit card debt and a loan against his Thrift
Savings Plan, Jim’s process toward retirement was riddled with bad
decisions. Retirement planning is not an event. It's a process. Like
many Americans living a decent life, he drew a roadmap to retirement
not based in reality and with too many detours.
College tuition, paying off a
mortgage, traveling and/or funding a retirement lifestyle often feel
like abstract concepts far in the distance. But mapping the future
to financing any goal must be drawn on sound principles of money
management and a few strokes of common sense.
Before launching the financial
journey, the following questions need to be answered:
When will I need the money? What kind
of lifestyle do I want? How much is that likely to cost in today's
dollars? What annual inflation rate should I assume? And the most
important question of all: Where am I now? These are tough
questions, but preparation is key to a successful journey and the
starting point of your financial roadmap is where you are today
financially. Your ultimate destination, or “X” marks the spot,
are your financial goals in the future.
Begin with two basic financial
1. a cash flow statement and
2. a net worth statement.
A cash flow statement tells you where
you are spending your money. Spending records such as a checkbook or
credit card statements will give you a clear picture of your
monthly, and annual, expenses.
Create a statement of net worth. Net
worth is simply the value of your assets (what you own) minus your
liabilities (what you owe). Once you have a clear picture of your
cash flow and net worth, you can begin to see if your savings
patterns are in line with your goals.
If there is a surplus of money left
over every month, there is money to work with toward financial
goals. If there is no surplus, review current expenses and reduce
them. This single act of bravery will lead to a greater sense of
personal fulfillment along the way.
Next, identify interim financial
goals. You can do this by knowing where you want to be in 20 years.
Back up the process and look at where you need to be 15, 10, 5 and 3
years in order to make that ultimate dream a reality. Identifying
interim financial goals will help keep you on track toward your
Once you have embraced a vision for
your retirement years, it's time to get a clear picture of today's
finances. Don't be fooled by the assumption that you'll be able to
live comfortably on 70% of what you're making now. Most of us will
face rising health care costs and increased recreation and travel,
and 70% of our current income probably won't be adequate.
Do not be seduced by other temporary
pursuits, no matter how tempting they may seem.
If you finance a boat to enjoy today,
for example, don’t do it without determining how much longer will you have to work
to enjoy a comfortable retirement.
Excessive spending will stall
progress towards any financial goal. Jim Barton learned this the
hard way. With a camper, trucks, travel and a credit-financed
lifestyle Jim’s destination -- retirement at 55 -- wasn’t
feasible. His roadmap took a longer, less fruitful route.
There's no quick fix for years of
poor spending decisions, but the sooner you take control of the
problem, the sooner you'll be able to reach your goals. In today’s
world, feeling overwhelmed by debt is natural. Decide on a
measurable money goal, and as Nike says, “Just Do It!” For every
dollar of income you earn, allocate ten cents to savings and twenty
cents to debt reduction. Consistency will reward you with progress
towards your goals. It’s just that simple.
Jim Barton had to adjust his goals to
fit reality. When he sat down with a financial planner, it was clear
that he'd have to postpone retirement until at least age 60, so that
he could pay off the camper and the other debts. But eventually, he
did get to retire, and he did get to travel.
While it might sound a little like
herding cats, it’s not. The most attractive aspect about money is
that it is tangible - it can be counted and accounted for over time.
There is nothing mystical about money, only that if not managed
properly, it will disappear before our very eyes.
For more information on financial
planning, or to locate a professional Certified Financial Planner (CFP)
or a Chartered Financial Consultant (ChFC), go to www.cfp.net
and locate a qualified planner by keying in your zip code.
Alternatively, you can always ask friends and colleagues for
referrals. For further information on credit card debt, financing,
credit rates and general information try www.bankrate.com
where they have regular newsletters with helpful financial