Taking the First Steps Toward Goal Oriented Retirement Planning
This chapter is from the book
This chapter is from the book
This chapter is from the book
Thomas Edison was quoted as saying that genius is 1 percent inspiration and 99 percent perspiration—prepare to be inspired and to sweat. Congratulations on taking this step toward empowering your retirement. You've gotten your hands on this book, and you're ready to partner with me as your guide to climb this retirement mountain.
You will find this book very conversational. Imagine me as the little guardian angel on your shoulder whispering into your ear (and occasionally shouting benevolent words of encouragement). My goal in writing this book is simple and straightforward: I want to educate and empower people who are struggling with their own retirement issues.
There's an old Chinese proverb that basically goes like this: "Tell me something and I'll forget it, show me something and I may recall it, but involve me in something and I'll understand it." I want you to understand the consequences of your action or inaction, and I want to provide you with a path to achieve your goals. This first chapter is all about overcoming inertia and establishing the proper mindset as we prepare to learn about retirement issues and build a framework that will ultimately provide you with the retirement of your choice. This won't happen without a lot of hard work; the hardest fought victories always feel the best.
Carrying forward our Far East references, 2,500 years ago, there lived a military expert by the name of Sun Tzu. He and his father before him were renowned across the land as being not just great warriors, but great military strategists. Those who have studied Sun Tzu understand that one of his core principles was avoiding conflict, not forcing conflict. He was also well prepared for achieving any goal, and I've always been able to apply his principles during my career. Imagine that achieving your retirement goals is a war and listen to Sun Tzu's thought: "Conquerors estimate in their temple before war begins. They consider everything. The defeated also estimate before the war, but they do not contemplate everything. Estimating completely creates victory; estimating incompletely causes failure".
The Retirement Countdown Plan
For you to be able to retire on your terms will require a concerted effort. Only a small percentage of Americans have the luxury of not worrying about how they will meet their post-retirement income needs. The rest of us must either be lucky or take action to establish, monitor, and achieve a plan that will result in meeting our goals. The process we will go through to establish your retirement framework is called Goal Oriented Retirement Planning, or GORP for short. GORP is the energy for your retirement plan.
GORP breaks down the process of planning for retirement into small digestible steps that create a feeling of hope and empowerment, not fear and procrastination. But hope and empowerment can only create the proper mindset for doing the work that needs to be done. Once you recognize you have to work to achieve these goals, you need to develop a plan to implement change. On a step-by-step basis over the course of this book, you will learn what is required to establish and meet your retirement goals. The following is a brief discussion of the framework from which we will work. Much greater detail can be found on GORP and applying its principles in Chapters 5, 12, and 13.
Step One: Commit to the Process
Retirement planning is a process, not an event. To achieve your goals will require a commitment of time on a regular basis. You will have to decide if this is a task you want to tackle on your own or one that requires you to enlist the help of a professional. If you choose to go it on your own, you must remember the key limitation is time, and 100 percent of the workload rests on your shoulders. If you work with a professional, you can choose the extent to which you want to seed control of certain elements of the process and take a management role. In Chapter 13, you will find a grid that will help you decide when and how to use a professional.
Step Two: Collect Information
The second step involves pulling together all kinds of data you will need as you begin to conceive and develop your plan. Included here would be information on the following:
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Income and assets
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Expenses and liabilities
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Insurance
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Legal documents
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Tax documents
Step Three: Develop a Plan (Strategic)
Once you have collected all of the necessary information, you can start to lay out a strategic plan. It's important at this stage to keep the tactical aspects of the plan at bay until you have completed the strategic aspect. In other words, this is not the stage to start looking at mutual funds or any other investment vehicle, regardless of whether you have listed them as assets or feel compelled to buy them. This is the stage of the process at which you articulate your retirement goals and determine the cost of the individual goals.
Step Four: Implement the Plan (Tactical)
In this fourth step, you are ready to implement the plan. This is the tactical element of GORP where you match assets to goals and look at repositioning assets that have no place in your plan. One of the benefits of GORP is that there is no place for an asset that is not assigned to meeting a goal. This is also the step at which you'll take action on implementing an estate plan and you'll develop a plan for managing the various elements of risk that can impact your goals.
Step Five: Monitor and Update the Plan
The final step is to monitor and update your plan. This involves periodically reviewing your goals and the assets assigned to meeting those goals. It also involves looking at how your life may have changed and how changes affect both your goals and other elements of the plan such as tax, estate, and insurance planning. As you change jobs or are promoted within an organization, your life can change and your goals may be affected by those changes. What if your original plan assumed both you and your spouse or partner would be full-time wage earners and you chose to modify the plan to allow for one of you to stop working for 10 years to raise a family? Or, what if your lifestyle were altered in such a way that your estimate for retirement income was either too high or too low? By continuing to review and modify your plan, you increase your odds of achieving success.
Timely Tidbits
Professional and recreational climbers use GORP too. Whereas GORP in Retirement Countdown is the fuel you use to sustain your retirement, GORP to a mountain climber is a trail mix for energy. Originally, GORP was granola, oats, raisins, and peanuts, but today the term refers to any energy boost mixture.