Get Clarity About Your Long-Term Goals

Most of the people I’ve served over the last 20+ years of being a financial advisor have come to me with one overarching goal. They want to achieve complete financial independence so they can live life without worrying about money. Most of them will not inherit a big pile of money. They’ve had to earn it. They’ve had to be, and will continue to need to be, really smart with money.

But here’s the interesting part for me. When I ask people what it feels like to them to achieve complete financial independence, I hear very different answers. Depending on their life experiences and what they value, here are some common answers to that question:

• They want no debt, even after paying off a primary home and possibly a vacation home.
• They want their money to outlive them, so they never become a burden to the ones they love.
• They want to live a comfortable lifestyle through end-of-life.
• They want to pay for their children or grandchildren’s college education.
• They want to help their adult children get established in life by putting a down payment on a house or helping fund a business.
• They want to leave an inheritance to heirs.
• They want to have experiences that they put off when working full-time, particularly to travel, take vacations and enjoy time with loved ones.
• They want to honor their parents by ensuring they are well cared for through end-of-life.
• They want to remain healthy for as long as possible both so they can enjoy life and so they do not become a burden to loved ones.
• They want to make an impact on the world by supporting charities for which they feel great passion.

I’m wondering how these goals compare to what you want to achieve. I would imagine some of what I’ve described above may be true for you. But what are your priorities? What do you feel that you absolutely must accomplish?  What matters less for you? What goals are not listed above?

Getting clarity in this area is the starting point for making the early retirement decision. Why? There is an old saying that applies: “If you don’t know where you’re going, any road will take you there.” Unless you’ve already achieved all of the goals I’ve listed above, the question that sits before you is this – will I have enough money to do everything I want to do in life? The only way that I know of to answer that question is to have real clarity about what you want to achieve. That is the starting point.

To make this actionable for you, I’d like to suggest that you complete an exercise. Get together with your significant other and review the goals I’ve put forward above. Then identify any goals you want to achieve that are not in my list. Then rank the goals by priority to establish a list of what’s most important to you. This will serve as an excellent framework for understanding what you want money to do for you and your family.

Align Or Update Your Financial Plan To Reflect Your Long-Term Goals

I believe thoughtful financial planning is the cornerstone to achieving complete financial independence. Most working professionals have a financial plan of some sort. Some Boeing employees I’ve worked with have a formal plan that was documented at a given moment in time, often many years ago. Others have a more informal financial plan, not much more than a set of projections on the proverbial paper napkin.

If you already have a financial plan, I believe it’s very important to update it with the goals you’ve listed above, ranked by priority. If you don’t have a financial plan, now more than ever, you need one. Why do I say this? An effective financial plan is like a set of durable overalls for a farmer. It allows you to get up every morning, put on the right mindset and go about your day with confidence about the future. A financial plan, like overalls, walks around with you all day.

To make this actionable for you, let me suggest a couple of steps you can take. First, if you have a financial plan but you haven’t looked at it in a long time, pull it out, dust it off and see how out of date it sounds to you. If the goals you’ve identified, from the exercise above, are not reflected in your financial plan, I advise you to update it.

Second, if you don’t have a formal financial plan, based on long-term projections, I recommend that you build one now. Without a realistic financial plan, it is virtually impossible to understand the financial implications of early retirement. Here are two options for doing so. You can buy some books on the topic, if you have time, interest and confidence in your ability to do so, and tackle it yourself. Or you can choose to work with someone like me who builds financial plans every day.

Make Sure You Understand The Early Retirement Package You Are Being Offered

After reviewing the early retirement options of a number of Boeing employees, I was struck by one thing. No two people seem to have quite the same set of options. Some further research indicated to me that a complex set of codes seems to be the driving factor in what employees are offered. What this means for you, more than likely, is that you can’t rely on a cohort of people who might have joined Boeing at the same time as you to understand your package. While there will be similarities, there may also be important differences.

This is why my advice to you is to learn everything you can about the early retirement package you are being offered. You need the most accurate information to make the most informed decision. This is not a time to assume you understand, given the significance of this decision.

To make this actionable for you, I’d like to suggest a few things you can do. First, read through the information you’ve been given and make note of any areas where you may not understand the language or what’s being described. This is a time to listen to that still small voice that sometimes suggests – hey I don’t know what that means. Don’t ignore that voice, especially now. Second, make sure you understand what you’ll be giving up after you leave Boeing that you may have relied on for many years. A really simple example of this is health insurance. But there are likely many more areas where you’ve relied on Boeing in the past that may not be there after retirement. Third, understand what could happen if you don’t accept the package. Could you be laid off, furloughed or terminated later?

Build A Realistic, Data-Driven, Financial Model That Projects Decades Into The Future 

You’ve likely heard the saying – numbers don’t lie? Now more than ever, numbers are your friend because they’ll tell you, given reasonable assumptions, what you need to do. A good financial plan is predicated on understanding a few simple things: 

• What is your net worth today?
• What are your annual costs of living?
• How much money do you need to achieve your long-term objectives?
• How does that number compare to your net worth, income sources and other factors like a pending inheritance?
• What steps do you need to take to ensure you are most likely to achieve your objectives (this is that farmer overall analogy I used earlier).

A realistic financial plan will tell you how much money you’ll need to achieve the long-term goals you identified from exercise one above. Some financial advisors call this “the number.” Once you know your “number,” you can then make reasonable projections about how retiring early will impact attainment of that number. The most important thing is that your projections are based on realistic assumptions and models that take into account more than one scenario. None of us can predict the future. But financial models can show you what different scenarios may look like for your unique situation.

Prepare Yourself And Your Family For The Coming Changes

There is an additional consideration here that I believe many financial advisors overlook. I think this consideration could be the number one factor in whether or not you’ll be happy after taking early retirement, even if you can afford to do so. What will you do with your time and energy?

Boeing has been like a family for many employees, especially those who have been long-term staffers. In many instances, colleagues may have grown up together professionally, sharing career experiences that no one outside Boeing would really understand. Walking away from the Boeing family and all those experiences may not be something you are ready for emotionally. If you’ve loved your time at Boeing, leaving the company will probably put a big hole in your life. How will you fill that hole?

I recommend, to everyone considering early retirement, that you start making a plan now for what you’ll do with your time and your skills. Many Boeing people I’ve worked with plan to travel for some period of time after retirement and simply enjoy life. But they also want to volunteer and use their skills to make the world a better place.

Please don’t make the mistake of believing that you can simply stop showing up to work every day and find something to do. This assumption can lead to family conflict or extreme boredom. You may not enjoy your significant other saying “I liked you better when you were working.” Some people even find they can’t really retire because they miss work so much (sounds crazy I know). Those who retire and them come back out of retirement wreak havoc on their financial plan. Please make sure you have a plan for what to do after retirement.

How Can I Help You And Your Family?

As you may have surmised, by reading this article, I love what I do. I take great pride in serving my clients well, in listening to their unique concerns and applying my skills to help them achieve their goals. You are likely facing one of the biggest financial decisions of your life. Please do not do this alone. The risks to you and your loved ones are simply too high.

If what I’ve said here makes sense to you, let’s setup a time to talk. I’m not saying that I’m the right person to help you achieve your goals. We can only know that once we’ve had a chance to talk. I will make you one last promise. Give me an hour of your time and I will give you at least five more nuggets of wisdom to help you and your family. I know you won’t regret one minute of our time together.