Standardized Tests for Investors: Am I on Track?
The swimsuits are being put away for next summer, the bookbags are coming out. It’s back-to-school time! As the kids head back to the classroom, the teachers are finalizing lesson plans to help the students prepare for the [insert harrowing music] standardized tests. One intention of the standardized testing program is to track a student’s progress against a baseline.
What about adults? As a financial planner, this is a common question that I am asked. You’re doing all your homework—automated savings, maxing out retirement investments, regularly reviewing your insurance coverages – but what does it all add up to? And, at the end of the day…are you on track?
To answer the question, we first need to start with another question. On track for what? Usually someone is asking about being on track for retirement. Yet, that is still quite nonspecific. Retirement at what age? Full or partial? In the DC metro area or somewhere else? What do you envision doing in your retirement chapter of life – international travel, volunteering, watching the grandkids perhaps? All these questions play a vital role in the assumptions that go into your financial planning for retirement. While it is the nature of life to be able to pivot as life evolves, it is important to at least have an understanding of what your general goalposts are; if you don’t know, how is your advisor supposed to?
There are many nuances and assumptions used in financial planning, more than we can cover in this article. So, there is not a simple answer to the question of being on track. Yet, I think a good place to at least start the conversation is with a checkpoint chart like the one below that is designed to help answer this very question. Some key assumptions are shown on the right – for example, it is assuming a full retirement at 65 by the primary earner with 35 years in retirement, saving 10% of the current household income between now and then. Go to the closest intersection of your household income and your age; this represents the current savings you should have under the other assumptions cited.
Author Note: I cannot stress enough how not personalized this chart is, and if you are truly looking for a personalized response and plan, it is important to collaborate with a financial planner who can customize a retirement projection for you.
And as we lock into the “Back to School” vibes, remember a lesson that we strive to teach our kids about responsibility and priorities. If there is a book report due, and you have not started reading the book, then you cannot go to your best friend’s house to play after school. You must go home to read.
If you are not where you want to be on your own personalized path to retirement, what changes will you make to bring yourself back on track?
Want some ideas? Let’s talk about it. Join me to discuss how I can help you on your journey to retirement at our next Women & Wine event, September 11 at 5:30pm at Wine Gallery 108, or reach out to me via email at lobrien@xmlfg.com.
SEE ALSO: My Travel Budget: Top 5 Areas to Invest for a Memorable Trip
This communication is for informational and educational purposes only. No content or reference is intended to be a recommendation for the sale or investment in any product, strategy or service nor should it be perceived as individual advice. Please seek the advice of a financial advisor regarding your particular financial situation. Visit xmlfg.com for more information.
