How do you rate your financial shape? After 20 years of helping people plan for retirement, I've learned there are some parallels between a person's financial fitness and physical fitness.
First, ask yourself if you keep track of the daily financial headlines and whether the inevitable market fluctuations make you uneasy or put you in a bad mood. You'd be amazed at how many people are like that. It's kind of like stepping on the scale every day when you are trying to lose weight. That can be a frustrating way to live.
Whether you're talking about financial or physical fitness, all of us can benefit from having a dependable professional to guide us, nudge us and offer new ideas.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
I hired a fitness trainer four years ago because, even though I had my own workout routine at the gym, it was stale. I always did the same stuff: lots of upper body work and barely any leg days. I wasn't crazy about cardio either. And I missed workouts when things got busy on the job.
My trainer changed everything. Now I get up at 5 a.m. every morning, do my pre-workout checklist, meet my trainer at 6 a.m. and crank out new and interesting workouts thanks to his plan. I show up every day because, if I don't, I still have to pay him, and I don't like giving money away!
Cardiovascular workouts are a lot like budget planning. Many people hate doing cardio, just as they hate creating a budget.
Put together a real budget; few people do so. When I ask clients how much money they need a month for basic necessities, they can't give me a number. Just as my trainer tells me I need to do cardio work, I tell my clients they need a budget.
When I build a plan for retirement, I break people's finances into two categories: the necessities and the discretionary spending. Examining exactly how you spend money can be a painful exercise, but it is pivotal to creating a solid retirement plan.
Now I love leg day at the gym. I used to avoid it. Leg day is similar to estate planning. People tend to avoid estate planning because it makes them think about the end of their own race. The last time they updated their will was when their children were born. Maybe they never even got around to drawing one up.
It's easy to put off leg day, and estate planning, by telling yourself you'll get to it, eventually. That's when my trainer, and an estate planning attorney, can help. It's so much easier when the coach tells you, "Okay, today is leg day. We're not going to avoid this any longer."
Eating right is like having the right retirement plan. If you eat better, you build muscle, you get stronger, and you can run farther with less fatigue.
To help can create a better retirement plan you should focus on five key elements:
If you commit to these goals for your money, then you'll earn an off day! The off day, physically, helps your body relax and recuperate. In the context of your finances, it means having more confidence when the stock market dips. Now you can comfortably take your eyes off those bad headlines.
Remember, you want to be able to focus more on your life and less on your money. Just as being physically fit makes you feel better and live better, you'll reap the same rewards from your efforts to become financially fit.
Bill Smith is CEO of W.A. Smith Financial Group and Great Lakes Retirement, Inc., as well as an Investment Adviser Representative and insurance professional. His firms focus on retirement planning and wealth management.
Dave Heller contributed to this article.
-
Social Security Will Continue Sending Paper Checks Sparingly, Reversing CourseThe Social Security Administration has backed off from plans to eliminate paper checks. However, it will only send checks in the mail as a matter of last resort.
-
Ask the Editor — Tax Questions on Four New Tax DeductionsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on four new tax deductions in the "One Big Beautiful Bill."
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case StudySusan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your PortfolioAlternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
An Investment Strategist Takes a Practical Look at Alternative InvestmentsAlternatives can play an important role in a portfolio by offering different exposures and goals, but investors should carefully consider their complexity, costs, taxes and liquidity. Here's an alts primer.
-
Ready to Retire? Your Five-Year Business Exit StrategyIf you're a business owner looking to sell and retire, it can take years to complete the process. Use this five-year timeline to prepare and stay on track.
-
A Financial Planner's Prescription for the Headache of Multiple Retirement AccountsHaving a bunch of retirement accounts can cause unnecessary complications. Consolidation can make it easier to manage your savings and potentially improve investment outcomes.
-
Overpaying for Financial Advice? A Financial Planner's Guide to FeesTake five minutes to review how much you're paying for financial advice. If you're overpaying, you could be better off with an adviser who charges a flat fee.
-
The Big Red Bucket Theory: A Financial Adviser's Simple Way to Visualize Your Retirement PlanWhen you think about retirement, picture a big red bucket brimming with all the money you've saved. It's everything you've got, and it has to last you.
-
A Guide to Personalizing Your Retirement Plan for Maximum ImpactThis strategy challenges conventional retirement rules of thumb by combining traditional savings, home equity and annuities to provide higher income and liquid savings and help cover long-term care costs.
