Financial Mapping: A retirement plan is like a navigation system for your money and time

I am an avid observer and loyal participant in adventure racing. The exploratory races I follow (I keep an eye on a map online) are 3-6 day races held all over the world. In adventure racing, racers plot their way to checkpoints over a course of more than 300 miles (usually 50-100 miles per day) while mountain biking, rock climbing, downhill running, trekking, and more. All with only hours of sleep along the way.

Planning the right course is an essential part of this sport. There is no specific path and you do not have to stay on specific paths.

Navigation systems like GPS are strictly prohibited in adventure racing, but it would certainly be interesting to see an algorithmically perfected route, adjusted for the weather, unexpected lane closures (such as fallen trees), and the physicality of each individual team.

Financial mapping, creating a financial plan for your entire life, is as daunting as plotting your route for an expedition. Either way, you’re trying to figure out how to get from point A to point B.

You could be like an adventure racer, using the equivalent of a paper map and marker to chart your financial path. However, hiring the expertise of financial planners (either digital like NewRetirement Planner or the fee-only Certified Financial Planner®) can make the financial mapping process much easier. These resources can serve as a luxury navigation system for your finances.

A good financial plan, like a well-drawn road on a map, is like a vision of the future. You can predict where you’ll be as you move along your path.

Financial Mapping: Where are you now and what is your ultimate financial destination?

The first step in any journey is knowing where you are now and determining your final destination.

For most people, the long-term financial goal is to be able to finance their lives through longevity at a spending level that enables them to live comfortably.

Understand your strengths and values

There is no one financial map that is right for everyone. Your ideal path to a well-funded life can be adjusted to your strengths and values.

I don’t do multi-day adventure races, but I will do 12-30 hour challenges. My strengths are running and hiking and I don’t really like steep or uphill mountain biking. However, I’m also there to adventure, not to win. And I kind of like bragging about doing something miserable. So, my route will avoid cycling when possible and prioritize the more interesting and perhaps even daring points along the way.

My strengths and values ​​when it comes to financial planning are similar. I like challenging work and am willing to take risks such as starting my own company. I also want to prioritize my role as a mother and get the most out of life as possible. Fortunately, I also love the interesting logistics of juggling all the leverage I have to live the long, enjoyable life I aspire to.

Your financial plan should prioritize what you are good at as well as what you enjoy and value.

What means of transportation are available to you?

Work, saving, investing, spending levels, debt, insurance, and interest are all examples of “transportation” to your final destination of an adequately funded life.

You can use these levers in different ways over different periods of time to help you reach your long-term financial goals while also living the life you want, with any downtime you desire.

The NewRetirement Planner goes beyond savings and investments, allowing you to maintain a comprehensive plan and financial map.

Choose your route: What stops and transfers do you want to take?

When traveling, some people like the scenic route. Others prefer super highways or take a winding route with lots of stops.

Some people, like Financial Independence Early Retirement (FIRE) advocates, want the most direct and quickest path to retirement—with no detours at all. FIRE followers want to retire as soon as possible, trim and save every dollar they can, work side gigs and limit spending to be work-free.

Most people take a more traditional path, balancing spending to improve their lives in the short term with strategic savings for retirement in their 60s. There is time on the highway at the speed limit with a 9-5 job and saving 20% ​​of your income. However, there is also time for scenic routes and enriching stops.

Hence, there are always people who might go off any type of road completely for a while and play catch-up on the super highway later or live peacefully in more meager conditions.

There are no right answers, only what is right for you. The NewRetirement Planner is designed to accommodate all types of plans.

Prepare for the unexpected

Regardless of your vehicle and route, it’s not enough to chart a single route to your destination. You have to know what to do when circumstances change. Inflation, stock market troughs, health events, natural disasters, and more can wreak havoc on the best-laid financial plans.

Proper insurance can prepare you for the unexpected. Savings strategies, like the bucket system, can maximize your money for an uncertain future by ensuring you have cash available to cover living expenses if things go wrong.

You want a plan that anticipates things that could go wrong and knows what you will do when the unexpected happens.

In fact, you should probably draw up a best-and-worst-case scenario plan or financial map. NewRetirement Planner enables you to do this in multiple ways. You can:

  • Monitor your optimistic and pessimistic assumptions
  • Run different scenarios for different possible circumstances (long-term care needs, more conservative investments and returns, job loss, work bonus, inheritance, etc.)
  • Evaluate your Monte Carlo analysis

Prepare for the unexpected

At one recent race, Expedition Oregon, race organizers added snowshoes to the list of mandatory equipment at the last minute when they saw snow was forecast. Your financial plan can include similar strategies.

You know taxes are in your future. Plan ahead for Roth conversions or develop a strategy to reduce taxable income. Review the tax information and Roth conversion explorer in NewRetirement Planner to evaluate your tax situation.

Forecast health care spending. The average cost of health care for a 65-year-old couple is $300,000. A plan to finance these expenses is critical to achieving your long-term financial goals. NewRetirement Planner can give you a personalized estimate of your out-of-pocket health care spending, using your age, location, health condition and the type of coverage you want.

You can also create a projected budget for the rest of your life, the more detailed the better. Then, take steps to ensure income to cover your spending wants and needs.

Measure progress

My first rule when adventure racing? dont waste.

It is essential that you constantly check the map to make sure you are where you want to be. Check landmarks and trail crossings and measure time and distance traveled. There’s nothing worse than realizing you haven’t been paying attention and suddenly have no idea where you are and need to backtrack to regain your bearings.

It can also be useful and fun to monitor your key financial metrics. What is your net worth now and how long is it expected to continue? Are your savings on track? Is your spending in line with expectations? Are you making progress towards your goals?

Don’t lose financially. Stay on track by monitoring metrics.

Remap when needed

It’s kind of frustrating but also reassuring when the GPS starts turning and the screen says “Reset map, stop forward”. When I’m out in the wilderness, I don’t mind changing course to find a route better suited to new information and conditions.

It is important to do the same with financial charts. You won’t be able to anticipate every roadblock, accident, interesting side trip, or malfunction.

When financial conditions change such as inflation expectations, you need to make adjustments to your plan using updated information and, when necessary, chart a new path to achieving your goal.

Keep remapping

We hope that life will be long and interesting. You will likely make significant adjustments to your financial plan over time. We recommend that you review your entire plan at least quarterly to update your data and make adjustments as necessary.

What resources do you use to chart a path to achieving your financial goals?

We are proud of the NewRetirement Planner and how it can serve as a financial guide or map to your goal(s). Building and maintaining a financial plan improves financial habits, decisions, and results.

We also know that sometimes you need some extra support. Did you know that we also offer:

  • Training: See your plan 1:1 with a NewRetirement Coach. Make sure your inputs are accurate and learn how to answer your questions using the tool.
  • Layers: Sign up for our 8-week session on how to use your planner better. Or try our more in-depth classes covering tax planning, portfolio and asset allocation strategies, building your income plan, and achieving your goals regarding spending, stewardship, inheritance, and asset transfers. (Log in to Planner and click Classroom in the left navigation bar.)
  • Credit fee only financial advice: Do you think you need professional guidance and reassurance? Work with a Certified Financial Planning Professional™ from NewRetirement Advisors to set and achieve your goals. Sign up for a free discovery session.

Now, get mapping.

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