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What To Do When You Know You Will Not Reach Your Financial Goals

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A lot of people set retirement goals many years in the future. Some are fortunate to reach it and some not so fortunate. Here is a plan, or a template, for those that could tell that they are not going to attain their goals.

  • Review your investments and expected cash flow
  • Be clear about your expected or hoped for retirement date
  • Review your probable spending from your retirement date forward
  • Comment: Medical costs are pretty substantial for those not working and who are under Medicare eligibility of age 65 and needs to be realistically estimated
  • Determine what you are able to add to savings until your retirement
  • Project out your investment portfolio until your retirement date
  • Comment: Making projections means estimating stock growth rates and dividend, interest and inflation rates. If you are too low estimating income or too high in estimating future spending you will not be hurt. The opposite of each of these would hurt you. It is important to be realistic and to relook at it annually and recalibrate your plan if the actual veers off too much from your projections
  • Calculate your cash flow from your investments, Social Security, pensions and all other sources for when you retire and thereafter
  • Compare the difference between the cash inflow and outflow and if it looks like it will be positive, you are in good shape; otherwise, not so good.

If it looks like you will be in good shape, then you do not need to do anything, but I suggest a serious relook every two years.

Here are some suggestions if you will fall short of your goal.

  • Change your goal by extending the retirement date, or reducing your projected retirement spending
  • Reduce some current spending so you could save more until retiring
  • Change you investments to make them riskier attempting to realize greater investment gains or interest or dividend income
  • Plan on continuing to work with a reduced work schedule
  • Do nothing and let nature take its course [doing nothing usually will put you where you probably would not want to be]

If the news is bad, then not knowing, not paying attention or not reacting does not make it go away and can put you in a position where you have no control over your destiny. So my suggestion is to pay attention and do something.

If you have any tax, business, financial, leadership or management issues you want to discuss please do not hesitate to contact me at emendlowitz@withum.com.

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