How To Set Financial & Retirement Goals

We talk all the time about how people need to give their dollars purpose or set goals for their retirement and even specifically for certain investments. But let’s dive deeper into what different goals look like for various folks approaching retirement. How do you determine if a goal is realistic or out of reach? We’ll tackle that conversation with plenty of examples on this episode.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

Transcript Of Today's Show:

Speaker 1: Hey everybody. Welcome into this edition of Plan With The Tax Man. We appreciate your time, as always, while we talk about investing, finance and retirement here on the podcast. Tony, my friend, how are you?

Tony Mauro: I'm great. Thank you for asking.

Speaker 1: Absolutely. You've been doing good? Had a good week?

Tony Mauro: A good week so far, a busy week.

Speaker 1: Yeah.

Tony Mauro: A lot of clients. One thing that we do this time of year is, we're so dependent on our computers. We got to make sure that they're always functioning properly.

Speaker 1: Oh yes, big fun.

Tony Mauro: Which is always a challenge.

Speaker 1: Mm-hmm (affirmative). I tell you what, and updates are the worst sometimes, aren't they?

Tony Mauro: Yeah.

Speaker 1: You'll do an update, and it just messes all sorts of stuff up. I imagine. Yeah, doing so many taxes and financial prep, and all that stuff, you definitely got to make sure you're on track with all that good jazz. It'd typically be like to get into some financial chat here right off the bat, but this week we're going to switch it around a little bit and take an email question that has come into yourplanningpros.com. That is yourplanningpros.com, and it's from Miles. Where was Miles at? He's over in a Joaquin.

Tony Mauro: He's in Joaquin.

Speaker 1: Yeah. Miles says, "Hey Tony, I've worked with a couple of different financial advisors over the years, and I do like both of them. Do I need to pick just one? Or, is it okay to work with multiple people?"

Tony Mauro: Mm-hmm (affirmative). This question, I got to preface it by saying, this is a little bit self serving and I think most advisors are going to say the same thing.

Speaker 1: Okay.

Tony Mauro: But, it is my opinion that you should pick one or the other. The reason for that is because, it's very difficult unless you, again, we talked about it last podcast, are trying to pit them against one another in performance, difficult to make sure everybody's on the same page.

Speaker 1: Right.

Tony Mauro: Again, without knowing how much you have and you're at the complexity, obviously there's exceptions, but for most, I think it's better to stick with one, make sure that they understand the entire financial situation, and that you're both on the same page. Now, some clients would think, well that's a little self-serving, because somebody wants to get paid either a larger fee or a larger commission. Generally, the fees are going to be the same, whether you work for two or with one, but I don't think that's-

Speaker 1: Right. Yeah, that doesn't... yeah.

Tony Mauro: All that relevant.

Speaker 1: Yeah.

Tony Mauro: But, I think it's a lot easier when you have a closer relationship with just one person at a time. Now, that doesn't mean you can't migrate to somebody else, but I generally, that's not a great idea.

Speaker 1: Well, and I think having two people, to your point, again I don't know the specifics of this Miles, but maybe one was helping you more through the accumulation phase and the other one you're starting to work with as you're getting closer to retirement, and they're just two different mindsets. Yeah, I mean having... I don't know, having two people in that situation definitely could be a little bit more convoluted than it needs to be, even if nothing else, because you just got to make sure that everybody stays in sync and all that good stuff. I do tend to hear a lot of advisors advise against that, just simply for, now again, the convolution of it all just gets a little too much. Maybe take a look, analyze what, I guess, pieces of each of the advisors. I guess, with the two guys, which one you feel is going to be the better fit moving forward into whatever stage of life you're in.

Tony Mauro: Yeah.

Speaker 1: Sometimes that's a good place to look at that. Of course, you can always get a second opinion, or in this case, a third opinion. You can always just come in and talk with Tony, and have a chat as well. Thank you so much Miles for the question, we certainly appreciate it. Let's get into our main topic this week, and that is How To Set Financial And Retirement Goals. We talk all the time about different advice and different things that we're sharing with folks, when it comes to giving their dollars purpose, Tony. Let's go through just a few basics, here, of some things for folks to think about. Specific financial goals are different for everybody. We say that every week or every time we do the show, but are there some general ones that we all can adhere to, that you can give us?

Tony Mauro: Oh, there certainly is, yes. Even though everybody is different, I mean, at the end of the day when you talk about retirement, the first piece, I think, is, what is financial freedom? Or, the best case scenario for you? Determine that, number one. That, of course, is going to be different, but that's the number one question. Then number two is, you really need to understand your entire situation. What I mean by that, other than just what you have, and a couple of IRAs, you need to make sure that you're covered with insurance, whether it be life, disability, possibly longterm care. What you want to do at the end, is also important. I think people don't give that enough thought, they just meander through. They think, "Well, the end is going to take care of itself." A lot of times, that's not the case. Then I think last is, most people want the same thing, is, they want to know they're going to be okay, that their goals are going to be able to be achieved and worked through, little bit of that peace of mind.

Speaker 1: Yeah. No I think that's a good point cause we all have those general, I guess, things on our wishlist that we want to accomplish in our retirement plan, of course peace of mind, and financial independence is certainly one of those. I think when you talk about financial independence, you could easily say independence from needing help from the kids.

Tony Mauro: Yeah.

Speaker 1: Or, being too reliant on anything from the government per se, Social Security. Hopefully, we're in a situation where Social Security is not the major component, it's just a factored in additional component to our retirement plan. But anyway, we'll stay with the goals here. How do you help somebody set those to their specific needs, Tony? What do you do when you're working with different people? Because again, they're all different.

Tony Mauro: They're all different. What we do is, after a little bit of a brainstorming session, generally, we use some software now. It used to be data sheets, now it's much more interactive, much easier for clients to use and have fun with. It'll do a lot of this at home with spouses and things, but really a lot of it is asking questions. General questions, just the easy stuff, such as, "How much do you think you want in retirement? What are your plans? Do you like to travel?" There's a lot of them. It's actually a lot of work, but hopefully fun work for the client, because we got to ask a lot of questions, so we can see what's important to them. That's where we have to start. We can't do it if we don't ask any questions. Just, the software makes it a lot easier now, and a lot more interactive versus just somebody handing somebody, like the old days, a big old, what appeared to be a book of paper, and you had to go through all this. People would get bored with it.

Speaker 1: Yeah, that's true. That's a good point. The questions certainly key. Really, it's not just you guys asking those questions, but we have, we as the other people on the other side of the table, have to be willing to answer those questions honestly too.

Tony Mauro: You do.

Speaker 1: Yeah.

Tony Mauro: I mean, you got to be able to take the time, sit down, and just dream a little bit.

Speaker 1: There you go.

Tony Mauro: It's not they require a lot of math or writing a big essay.

Speaker 1: Right.

Tony Mauro: Just try to think about what's good for you.

Speaker 1: Yeah. Obviously, if a married couple, being on the same page helps working through some of those. Many times you guys get to play as, quote unquote, marriage counselors as well, because sometimes [crosstalk 00:07:33] the folks get to the table, they started talking, and they haven't really maybe completely communicated with themselves as to what they want to do. What are some ideas or some things on realistic goals that people come in with? I think, obviously, this market has certainly probably helped spawn some potentially unrealistic goals.

Tony Mauro: Yes.

Speaker 1: Because, they're the ones like, "Yes, it's going to go forever."

Tony Mauro: Yeah, I mean that's a big one, right now, that we see across the board, but there are other things too. Some people are looking for just that single perfect investment. I get that a lot, and there is no such thing by the way. I mean, everything's got their advantages and disadvantages. The other thing though, especially with retirees on the back end, is they're really unrealistic with the sustainable withdrawal rate that they can use over their lifetime. We show them that visually. That if they're saying, "Well I want to have a withdrawal rate of 8%, 9%." For example, never touch their principal, we draw that out and say, "Based on what you have, you will be out of money at this age. Is that okay with you? Because if not, we may have to tame down your expectations there." That's a huge one. The other one, along the lines of that, is we'll get people coming in where they might be a little bit behind in saving for retirement, especially. They want to take too much risk, they get a little too ambitious, and trying to achieve too much gain too late.

Tony Mauro: I think that's a mistake, because it's good in this market, but boy if we don't have this market going, it could be a disaster. Then, it's too late to recover. That's another one. The growth without risk is, of course, always there.

Speaker 1: Sure.

Tony Mauro: Everybody wants that, we'd have to tame that down a little bit. There is no such thing as that. It's amazing, again, I think this is bred by a lot of information out there.

Speaker 1: No, that's true, definitely we were certainly inundated with it on a daily basis. Now, I always think about just the amount. Well, I think it's something we heard just several years ago, but they were saying that we get more information now in a day than our grandparents or great grandparents got in the entire year. Maybe it was even an hour to versus a year. It's pretty crazy, whatever it is, but yeah, being careful of unrealistic goals, seeing these commercials where everybody's got a boat and going to Disney four times a year. That's possible maybe, but also just don't think that every day... Retirement's just like any other days in life, you're going to have up days, down days, all those kinds of things from a physical standpoint, from a financial standpoint. It's going to be a lot of those things. You want to make sure that you're having some realistic goals when you're planning your retirements with your advisor and talking those through. Now, how can you know or how can we know, maybe that's a better question, if a financial goal is realistic or achievable, Tony?

Tony Mauro: Well, I think one of the things you've got to basically ask yourself is, "Am I as prepared as I need to be for all scenarios?" I mean, an easy thing is, you can't rely on just everything always going well.

Speaker 1: Right.

Tony Mauro: You got to plan for things.

Speaker 1: Right. If everything's got to be perfect for it to happen, that might not be the best scenario, right?

Tony Mauro: Yeah, might not be the best thing, because generally that doesn't happen, then there's a lot of heartache when that happens. It could be financially devastating as well.

Speaker 1: Sure.

Tony Mauro: Basically being able to take control of things, formulating a plan, that even if you just plot along at quote average, or a little better than average, that your scenario is going to work for you, that you're prepared if things don't go well. "What's plan B?" I would say that. Then, the last thing is not depending on just one particular investment or product, because it's not going to meet all your goals. I think you've got to be able and understand that it's the whole package that's going to help you meet your goal, not just one particular stock, a bond, or something like that. It's got to be a combination of things.

Speaker 1: Yeah, yeah. No, I think that's a good point, and I think that's a great place for us to end this week's podcast. Make sure that you're setting realistic goals that are achievable. Don't get too crazy in your lofty ideas. It's cool to shoot for the moon, but you want to make sure that you keep those grounded and have that conversation with your advisor, so that you aren't getting too far out of whack, and having that conversation on how to set and attain those financial and retirement goals. Of course, if you want to reach out to Tony and have that chat, get on the calendar, come in for a consultation. It's 844-707-7381. That's 844-707-7381. As always, go to yourplanningpros.com, send an email question to the show if you'd like, or just check them out online. You can also subscribe to the podcast through the website, as well as other outlets like Apple, Google, and Spotify, and just type in Plan With The Tax Man in the little search window on whatever platform of choice you use. You can find us that way, and you can always check them out. We certainly appreciate it.

Speaker 1: Tony, thanks for your time, my friend. I know you've got a busy day ahead. I'm going to let you rock and roll, but I always appreciate doing the podcast with you.

Tony Mauro: All right. Take care until we talk again.

Speaker 1: We'll see you soon here on Plan With The Tax Man with Tony Mauro.