No Plan Makes No Sense

Actions Without Clearly Defined Goals Creates Chaos

               by: Brendan Magee

     Sept. 7, 2012

I read an article on MSN's Money section, How To Avoid A Retirement Crisis. It cited a Employee Benefit Research Institute study that revealed that 44% of Baby Boomers and Generation Xer's are not saving enough for retirement. To combat the troubling problem, Stephen Utkus, Vanguard Funds' Director For Retirement Research offered four tips on how those who aren't saving enough can make up for lost time.


Mr. Utkus suggestons included:
- increasing the amount of money you are investing for retirment by one or two percent each year.
-plan on working two more years longer than anticipated.
-buying an annuity wth a portion of your retirment savings
-working a part-time job after retiring for five years

Certainly, increasing savings is never a bad idea nor is working the worst thing that could happen to a person, especially if they like their jobs and are healthy enough to do it.


The one thing that I found to be glaringly omitted from Mr. Utkus's suggestions was not imploring people to put together a written plan that included specific goals for the amount of money a person would need to save for retirement.

How would a person know when they have reached their goals if they hadn't first determined what that amount was? How would a person know if they are saving enough and in the right portfolio until they knew the rate of return they needed to bridge their retirment shortfall?

What a bummer it would be to find out you could have retired two years earlier and avoided the rush hour traffic and boring staff meetings? What a bummer to have realized you missed grandchildren's kindergarten graduations or put off trips with friends all because you thought you had to keep working. 

People, unless your name is Trump or Gates, have a limited amount of income  and a lot of financial obligations to meet. They also want to go out and have some fun once in a while. A plan would enable a person to be more in control of how they use their cash flow and assets. Without a plan, life could be a mad scramble trying to put out what ever firing is raging hottest at the time.


In other words a written plan and the ability to know whether or not it's working is a source of peace of mind, and isn't peace of mind why you would go to the effort of building up enough money to retire in the first place? 


Saving money for retirment is a great thing to be doing for yourself and your family, but before you do that, take the time to have a written plan put together. It will save you a lot of unnecessary headaches.


Brendan Magee is the president of Inevitable Wealth Coaching. With questions or comments call 610-446-4322 or e-mail brendan@coachgee.com.