8 min read
“I do it MYSELF!”
- my two year old daughter, Daphne, screams as she tries to climb into my truck, holding her daycare backpack in one hand and one of her favorite books in the other.
Earlier that morning, our family woke up and started our now-becoming-our-usual routine; my wife tries to wake Daphne up and prepare her for daycare while I feed the animals and take our dog outside.
Heading back upstairs to prepare for my shower, I can hear Kristin explaining, just like she did yesterday and the day before that, WHY Daphne has to get dressed today, and that we have to move quickly because mommy and daddy have to go to work. With zero concept (or maybe care) of time, Daphne declares she isn’t going to put on clothes today.
Fifteen minutes and a few meltdowns later, she comes downstairs - in a bright orange tutu with a purple dinosaur t-shirt, a Daphne original outfit.
Acting as if she didn’t just spend the majority of her morning throwing a series of tomato-faced tantrums, my happy as a clam daughter is ready to go to daycare in “Daddy’s truck!” (Until I try to actually put her IN the truck, that is…)
“New” Can Be Overwhelming
If you’ve raised children, you might empathize with me here. When Daphne first turned two, our friends and family tried to prepare us, “get ready for those ‘terrible twos!’” we were warned. But, we didn’t think it would happen with Daphne.
No, our daughter was great - aside from the occasional sleep-deprived nights, Daphne wasn’t really combative - she was a very easy going child.
But, every day, Daphne is gaining new skills and abilities, and according to healthline.com, “It’s natural for your child to want to test those skills and abilities...
...But because their verbal, physical, and emotional skills aren’t well-developed, your child can easily become frustrated when they fail to adequately communicate or perform a task.”
If you’re in the early stages of retirement planning and feeling a little lost, you’re not alone.
Many people find the transition can be difficult. You're expected to be able to transition out of something that was almost like part of your identity, and now live in a whole new life expectation, oftentimes with little to no support to help you in that adaption.
If you know you need help, but your skills aren't well developed (financial planning skills, that is, not emotional) - how do you even voice your concerns the best way?
Time horizon, Sequence of Returns Risk, Medicare Tax limits - its like learning a new language and skillset, only this time you don’t have a parent helping you understand what these words mean.
You have to play BOTH roles in retirement...
::A new world can be an adjustment, but if you have some one looking out for your best interest, they can help you reach your goals, even if its as simple as a Sonic The Hedgehog Ice Cream::
So, as you stand on the brink of retirement, contemplating the financial landscape ahead can be as uncertain and challenging as raising a two-year-old (while also BEING the two-year old).
And, just as parenting requires patience, communication, and adaptability, so too does managing your wealth in preparation for retirement.
The Need for Patience:
Much like the patience required in guiding a toddler's exploration, navigating the complexities of retirement planning demands patience.
Deciding when to retire is a pivotal life choice, and it involves a careful balance of financial considerations, personal goals, and lifestyle aspirations.
Understanding investment options adds another layer of complexity, especially in the ever-evolving landscape of financial markets.
The multitude of choices, from stocks to bonds, mutual funds, and retirement accounts, can be confusing and stressful for someone without a background in finance.
Moreover, planning for unforeseen circumstances is an essential aspect of retirement preparation.
Life is inherently unpredictable, and unexpected events such as health issues, economic downturns, or changes in family dynamics can significantly impact your retirement plan.
This uncertainty can create anxiety and indecision (not unlike the challenges a parent might face when guiding a toddler through an unpredictable world.)
Enter the financial advisor – a seasoned professional equipped with the expertise and, importantly, the patience needed to guide individuals through these intricate decisions.
Patience is a virtue not only in tolerating the inevitable uncertainties but also in carefully explaining complex financial concepts, answering questions, and addressing concerns.
A good financial advisor acts as a steady hand, providing the support necessary to navigate the intricacies of retirement planning.
In this context, patience doesn't merely imply waiting; it involves a methodical and unhurried approach to decision-making.
Ultimately, the financial advisor's role extends beyond managing investments; it involves providing the guidance and assurance necessary for individuals to traverse the intricate path toward a fulfilling and financially secure retirement.
Clear Communication is Essential:
Financial jargon can be confusing (much like deciphering a toddler's developing language).
A financial advisor can break down complex concepts, enabling you to make informed decisions about your financial future without feeling overwhelmed by industry terminology.
Just as toddlers are in the process of acquiring language skills, you may find yourself grappling with a new vocabulary that includes terms like "provisional vs. marginal tax rate," "shortfall analysis" and "standard deviation."
In both cases, there is a need for clarity and simplification to bridge the gap between the unfamiliar and the comprehensible.
This is where a financial advisor becomes a valuable asset.
Like a skilled interpreter, your financial advisor should be adept at breaking down complex financial concepts into more digestible, understandable terms.
Their role involves not just managing investments, but also acting as an educator, ensuring that you comprehend the nuances of your financial decisions without being bogged down by industry terminology.
By demystifying financial jargon, your financial advisor should empower you to make informed decisions about your financial future.
They'll take the time to explain the meaning behind terms, provide context for how these concepts apply to your specific situation, and offer analogies or real-world examples to enhance understanding.
Moreover, the process involves an ongoing dialogue where you can ask questions without hesitation.
This two-way communication is crucial for fostering financial literacy and building confidence in your financial decision-making abilities.
The goal is not just to provide information, but to ensure that you genuinely grasp the implications of your financial actions.
Flexibility In Approach:
Retirement plans - much like toddlers - can be unpredictable.
The ability to adapt to changing circumstances is crucial for a retirement plan to be successful.
A skilled financial advisor can help adjust your investment strategies, ensuring your portfolio remains resilient in the face of market fluctuations or unexpected life events, providing the flexibility needed for a secure retirement.
Planning Ahead:
Just as parents plan for their child's future, you must plan for yours. And if things don't go well for you, there aren't a lot of places you can place the blame.
A financial advisor can help you outline a comprehensive retirement plan, and after understanding your personality, wants and risk tolerance - address potential risks and uncertainties BEFORE they become a bigger problem down the road.
Maybe there are tax consequences (or advantages) to moving money at this time, or perhaps waiting to start social security would actually DECREASE your total monthly income. If your financial advisor and you aren't looking at the total picture and trying to foresee what could happen, how do you know if you'll be heading in the right direction?
Planning ahead allows you to anticipate challenges and make strategic decisions that align with your long-term financial goals.
Balancing Risks & Rewards:
Considering investment options can feel like navigating the fine line between allowing a toddler to explore and ensuring their safety.
A financial advisor can help you strike the right balance between risk and reward in your investment portfolios- optimizing growth while managing potential risks to secure a comfortable retirement.
We've discussed it in some of our After The Paycheck Videos, but many people are not fully aware of their risk tolerance, and, just as important, what their risk CAPACITY is.
Risk tolerance is your emotional (and psychological) comfort with risk in your investment portfolio, whereas risk capacity is the amount of risk your portfolio can responsibly take on without jeopardizing financial stability.
Risk capacity It is determined by objective factors like income, assets, liabilities & debts, insurance coverage, dependents, and time horizon.
This is where the expertise of a good financial adviser is critical.
If (you THINK) your risk tolerance is high, you might want to be aggressive in your investment portfolio in retirement, but if your portfolio's risk capacity is much lower, a few bad breaks could really jeopardize your entire retirement plan.
A skilled adviser can help you assess your risk tolerance and capacity accurately, align your investments accordingly, and ensure your portfolio is adequately diversified. All while ensuring you have the added confidence you need to get out there and explore life in retirement.
::Balancing fun & responsibility to make sure the things we care about are growing in the right direction - traits a good parent and a good financial advisor share::
As you stand at the crossroads of retirement planning, the parallels with parenting a toddler become surprisingly apparent.
Engaging the services of a financial advisor can provide the support, guidance, and expertise needed to navigate the uncertainties and complexities of retirement.
By recognizing the shared principles of patience, clear communication, adaptability, future planning, risk management, and education, you can approach your financial journey with confidence and assurance, ensuring a fulfilling and secure retirement.
If you'd like us to to help you with that financial journey, click here and find to start a conversation with us. Let's take the time to see if we are the type of person you are looking for to help you in your retirement planning situation.