You might be thinking, people in the past didn’t plan for their future – so why should you? The reason is the same reason why you haven’t packed for Europe: You are not going! Likewise, people in the past never planned for their future because they are not going to have one. They will not be worried about developing cancer at age 88 when they will be dead at 45 due to tuberculosis. Since people were not expected to live past 65, there is simply no need for planning.
No financial planner can protect you from the risks you face in life. But they can protect you from suffering from financial losses that may occur when any of those risks (injury, illness, death, and lawsuits) become reality.
A proper goal will be worthless if you are going to owe lots of money. You must move from owning money to owning money. It is not going to be funny if you run out of money before the end of your life. You got to accumulate assets to support yourself for a lifetime by making sure you don’t outlive your income. Having debt will make it impossible to achieve. So eliminate them as soon as possible.
Take for example you are 35 years old earning $3000 a month and continue to earn, that will be more than $1 million in career earnings if you retire at age 65. That’s good news but it actually works against us. People often develop a mentality that with this good income, life will take care of itself. But the real issue is not how much money you earn, but how much you keep.
Consider food. If you and your spouse retire at 65, living to average life expectancy of 80, there is going to be 32,850 meals during retirement (3 meals a day, 365 days a year over 15 year for two). The total will be $164,250 if each meal cost $5. Where will this money come from? To make things worse, you are going to live much longer than your parents and grandparents did. Therefore, money must last much longer. If you fail to plan, there is a possibility of a retirement filled with poverty, welfare, and charity.
It is for all these reasons – to protect against risk, elimination of debt, longer life expectancy, afford a comfortable retirement – that you need to create a financial plan.
Tuesday, May 25, 2010
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment