Long-term goals
Long-term goals
This is a long post, but I appreciate your patience and forbearance. I would also love any feedback and/or experiences based on my comments. This is a work in progress, and I do not mind admitting I missed something so your feedback is more than welcome.
In setting my short-term financial goals, I realized I needed to figure out my long-term goals first, then make sure the two were aligned. I had a general idea of what I wanted long term, but nothing firm. So here is my first pass at my long-term financial goals—the stretch goal would be 20 years for all of this. I figure if I hit the 80-90% of this by then, we will be doing well.
ASSETS
1) Have $1 million in my retirement accounts (currently 401K and IRAs). I want to hold off as long as possible on drawing Social Security (assuming it is still around), so the first few years of retirement would need to come from other sources like this. The underlying assumption on all is that I don’t need to rely on Social Security.
2) Have $1 million in non-retirement investment accounts. I still need to define this further, but I’m picturing converting a lot of this to high-dividend stocks as I get closer to retirement so I can have a steady stream of income without touching other assets.
3) Own our home, free and clear. That is no small feat here in the San Francisco Bay area! The last thing I would want at retirement is to still be making a house payment.
4) Have $40K available for each child’s college expense. I keep hoping my son will be a left-handed pitcher with a wicked curve ball, but we’ll at least plan on covering some of their undergraduate plans regardless.
5) To those ends, I want to educate my children on finances as much as I can. While thinking out loud on another weblog, I thought about giving the children control over part of my investment account when they hit a certain age. I will carve out these funds for their direction (say $2-$5K), but I will still control the transactions. Whatever the funds grow to will be theirs at a certain time (graduation or 25, I don’t know yet). I can only imagine what I would have done if I had $20-$40K available to me once I graduated from college. Probably nothing good (OK, probably spending a couple of years in Jamaica), but I can dream! I want to send them out into the world well-armed in many things, finances being one major dimension.
6) Protect all these assets. Structure our estate so that much of it bypasses probate. Make sure we always have guardians named for our children on updated wills. And whatever else we do, have adequate insurance so the surviving spouse isn’t forced to liquidate assets upon the other’s death.
7) Health: I will continue to exercise and work out the rest of my life, even if I have to make the time to do so. I find a strong correlation between physical and mental health.
LIABILITIES
1) No debt. Period. This is beyond no house payment. No debt at all, unless it is to set up a business (see Income below).
2) Purchase some long-term care insurance. The market on this seems to be coming back with some good products and decent rates. I need to look into this some more, but I figure if I can buy a policy that covers 4-5 years of totally assisted care and pay it off long before retirement, it will be worth it.
INCOME
1) Being planning NOW for what I want to do in retirement. Can I set up a business that I can run at my leisure? Can I do something that keeps me active and mentally alert, while bringing in money on my own? One good thing is that I’m named as trustee on my in-laws’ estate, and that will earn some income while doing something I love (investing). But I need to plan for more than that. I have seen too many people wither away prematurely during retirement because they failed to stay mentally active.
2) Look at changing fields in the next 10 years. One possibility, again while thinking out loud on another weblog the other night, is to look into becoming a public school teacher. What is in it for me besides fulfilling work? In California, it is tenure after two years and full medical benefits for your family after five years. Let that sink in as to how much money that translates into. That is just one thought. I figure I’ll be nosed out of my current place in about 10 years, and I want to land on my feet, fully formed (so to speak).
EXPENSES
1) As I mentioned in A Tale of Two Retirements, I have two different examples in front of me as to what my retirement could look like. One couple can not cover their day-to-day expenses. The other couple can cover their expenses, but they are too scared about running out of money and leaving their children with debts. I want a third way—I want to be able to do what I want, when I want, as long as it makes financial sense to do so. I love being able to travel and experience new things. I enjoy being able to walk out to my storage unit and pick out a nice bottle of wine for dinner. I want to have the time to cook again (like I did before the children) and entertain. And I don’t want to curtail that substantially in my retirement. I realize there is a balance to everything, and I don’t want to tip those scales to one side or the other too much.
2) Insurance. I’ll say it again. We need to be able to maintain the proper insurance for us to cover any catastrophic experience.
OUR WILD CARD
My wife’s practice: in setting the above goals, I’ve tried to factor in my wife’s business as little as possible. I want to be able to get where we want to be regardless of what she is able to do. If everything works out according to plan and she can add hours as the children go to school, that gives us a lot more flexibility in our planning. If for some reason she doesn’t expand her business, I want us to be able to get to these goals anyway. This is truly a wild card for us right now. My current assumptions are that she is able to pay off all of her debts (especially her student loan) from her practice, and nothing more.
I thank you for making it this far (assuming you did *lol*). Again, if you see any holes or gaps in my thoughts here, I greatly appreciate your feedback.
This is a long post, but I appreciate your patience and forbearance. I would also love any feedback and/or experiences based on my comments. This is a work in progress, and I do not mind admitting I missed something so your feedback is more than welcome.
In setting my short-term financial goals, I realized I needed to figure out my long-term goals first, then make sure the two were aligned. I had a general idea of what I wanted long term, but nothing firm. So here is my first pass at my long-term financial goals—the stretch goal would be 20 years for all of this. I figure if I hit the 80-90% of this by then, we will be doing well.
ASSETS
1) Have $1 million in my retirement accounts (currently 401K and IRAs). I want to hold off as long as possible on drawing Social Security (assuming it is still around), so the first few years of retirement would need to come from other sources like this. The underlying assumption on all is that I don’t need to rely on Social Security.
2) Have $1 million in non-retirement investment accounts. I still need to define this further, but I’m picturing converting a lot of this to high-dividend stocks as I get closer to retirement so I can have a steady stream of income without touching other assets.
3) Own our home, free and clear. That is no small feat here in the San Francisco Bay area! The last thing I would want at retirement is to still be making a house payment.
4) Have $40K available for each child’s college expense. I keep hoping my son will be a left-handed pitcher with a wicked curve ball, but we’ll at least plan on covering some of their undergraduate plans regardless.
5) To those ends, I want to educate my children on finances as much as I can. While thinking out loud on another weblog, I thought about giving the children control over part of my investment account when they hit a certain age. I will carve out these funds for their direction (say $2-$5K), but I will still control the transactions. Whatever the funds grow to will be theirs at a certain time (graduation or 25, I don’t know yet). I can only imagine what I would have done if I had $20-$40K available to me once I graduated from college. Probably nothing good (OK, probably spending a couple of years in Jamaica), but I can dream! I want to send them out into the world well-armed in many things, finances being one major dimension.
6) Protect all these assets. Structure our estate so that much of it bypasses probate. Make sure we always have guardians named for our children on updated wills. And whatever else we do, have adequate insurance so the surviving spouse isn’t forced to liquidate assets upon the other’s death.
7) Health: I will continue to exercise and work out the rest of my life, even if I have to make the time to do so. I find a strong correlation between physical and mental health.
LIABILITIES
1) No debt. Period. This is beyond no house payment. No debt at all, unless it is to set up a business (see Income below).
2) Purchase some long-term care insurance. The market on this seems to be coming back with some good products and decent rates. I need to look into this some more, but I figure if I can buy a policy that covers 4-5 years of totally assisted care and pay it off long before retirement, it will be worth it.
INCOME
1) Being planning NOW for what I want to do in retirement. Can I set up a business that I can run at my leisure? Can I do something that keeps me active and mentally alert, while bringing in money on my own? One good thing is that I’m named as trustee on my in-laws’ estate, and that will earn some income while doing something I love (investing). But I need to plan for more than that. I have seen too many people wither away prematurely during retirement because they failed to stay mentally active.
2) Look at changing fields in the next 10 years. One possibility, again while thinking out loud on another weblog the other night, is to look into becoming a public school teacher. What is in it for me besides fulfilling work? In California, it is tenure after two years and full medical benefits for your family after five years. Let that sink in as to how much money that translates into. That is just one thought. I figure I’ll be nosed out of my current place in about 10 years, and I want to land on my feet, fully formed (so to speak).
EXPENSES
1) As I mentioned in A Tale of Two Retirements, I have two different examples in front of me as to what my retirement could look like. One couple can not cover their day-to-day expenses. The other couple can cover their expenses, but they are too scared about running out of money and leaving their children with debts. I want a third way—I want to be able to do what I want, when I want, as long as it makes financial sense to do so. I love being able to travel and experience new things. I enjoy being able to walk out to my storage unit and pick out a nice bottle of wine for dinner. I want to have the time to cook again (like I did before the children) and entertain. And I don’t want to curtail that substantially in my retirement. I realize there is a balance to everything, and I don’t want to tip those scales to one side or the other too much.
2) Insurance. I’ll say it again. We need to be able to maintain the proper insurance for us to cover any catastrophic experience.
OUR WILD CARD
My wife’s practice: in setting the above goals, I’ve tried to factor in my wife’s business as little as possible. I want to be able to get where we want to be regardless of what she is able to do. If everything works out according to plan and she can add hours as the children go to school, that gives us a lot more flexibility in our planning. If for some reason she doesn’t expand her business, I want us to be able to get to these goals anyway. This is truly a wild card for us right now. My current assumptions are that she is able to pay off all of her debts (especially her student loan) from her practice, and nothing more.
I thank you for making it this far (assuming you did *lol*). Again, if you see any holes or gaps in my thoughts here, I greatly appreciate your feedback.
posted by Dwight at
2:44 PM
1 Comments:
I think your goals are all very well thought out. Your desire to stay mentally active beyond retirement is the only thing that needs to be examined some more. Having sizable savings with no debt and a desire to pass on your knowledge to your kids is an excellent backbone to your long term plan.
As for the post-retirement dilemma, I think the largest factor in determining a solution lies in housing. Retiring in North Carolina into a community as opposed to Texas or California will impact the kind of career you plan on partaking in at that time. Planning the financial resources to keep those options available is the best thing you can do in the meantime. Some place with low taxes, no snow and a condusive environment for an older person(not in Manhattan for example) is probably a good idea. I'm sure there are websites/magazines that rank these things.
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Splat, at 7:27 PM
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