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Attention Gen X & Gen Y: Gaping Holes in Your Financial Plan, Part 4

Gaping Hole Number 4 – Inaccurate Estimate of True Costs to Be Financially Independent

If you are under age 35, you have to really consider the idea that planning for your future financial independence, whether you want to accomplish that goal early or later in life, may be more difficult to accomplish than you realize.

Some mistakes often made are:

  • when we assume that we’d earn too high of a rate of return consistently
  • that social income plans such as social security will definitely be funded
  • that simply saving some arbitrary amount (say 10%) of our income will be enough
  • when the cost side of the equation is not addressed

These of course aren’t the only things to consider but they are certainly mistakes that have been made from one time or another. Examples like:

  • putting 12% in the box for estimated returns on your financial planning software
  • assuming a full social security benefit
  • fitting future lifestyle expectations to what your money will grow to instead of accurately projecting for costs

Bottom line – this is why financial planning must be done in a comprehensive manner. It’s not an arbitrary matter – and certainly not something to leave to the chance of “assumed” numbers. If you want to make sure your financial independence goal is real, then save much more than you thought you would, investigate investment diversification strategies that may be different from what you know, and avoid the tendency to live up to your means and get swallowed into the mainstream lifestyle.

Action Plan for True Retirement Goal: Go on the offense about your goals. Put a plan together that matches your personal outlook and values. And above all, go for it! Take the time to explore strategies and ideas that you hadn’t explored before. There are new risks including the instability of paper currencies, interference in the economy by central bankers, and the rise of newer economic powers. These factors, along with others, must be accounted for. Consider a meeting with a comprehensive financial advisor who has the global perspective and views the economic challenges in this world critically, and without prejudice.

See parts 1,2,3 here:

Part 1 – Underinsured

Part 2 –No Legal Docs

Part 3 – No Emergency Fund

I hope you enjoyed this article. As you can guess, I am a comprehensive financial advisor in the Boston area -specifically in Medford, Massachusetts. I also spend time and serve clients in the San Francisco bay area (right in SF), Maine and Florida. If you are exploring a comprehensive financial planning strategy, feel free to send us a quick contact or call us at 781.393.0021. Thank you!

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