Some people break savings goals down into all sorts of categories. They set money aside for things like having kids, sending their kids to college, buying a home, buying a new car, and retirement. While setting out such goals can be great for financial planning, they are kind of just one in the same…they’re all centered around planning for the future, which is the way our family tends to focus on financial planning.
Moving forward without blinders on
Sometimes people become so focused on a particular goal that it’s almost like they’re moving ahead with blinders on. They think that college savings must be in the form of a 529 plan, or that retirement savings must be in the form of an IRA or similar stock-based retirement plan. They think that a home must be purchased with a mortgage or that college must come with student loans. Such things are just the norm for so many people that they become the standard way of doing things and people forget to look outside the box when it comes to such planning.
Sure, such investment vehicles may be options to particular savings goals, but they need not always be the only options. And only considering these types of options could leave other – and possibly better – opportunities out when creating a financial plan. Therefore, rather than focusing on a solitary goal or even several goals, it might work better to simply plan for the future. This way – whether it’s education, retirement, housing, health, or other issues that arise – they can be dealt with appropriately and without constraints (i.e. the time or use restrictions that may come with particular assets or investment vehicles).
Retirement isn’t a guarantee
In this day and age, retirement isn’t necessarily a guarantee. This means that finding work that is not only profitable but mildly tolerable or even enjoyable can be critical to planning for the future.
Finding work that we enjoy, while at the same time planning for financial security, could provide us more options when it comes to a retirement-age future. It’s not so terrible a thought having to consider a working retirement if your work is something that you like. And finding such activities that we not only enjoy but that keep us busy and earn us income means that we may not have to focus solely on planning for retirement as much as planning for the future in general.
Putting assets where they belong rather than where they’re expected
Putting all our eggs into retirement accounts could leave us cash strapped or without enough funds should we need them elsewhere. Having all our money in accounts or assets that are bound by certain withdrawal rules and/or penalties means could hinder us when it comes to other opportunities. Whether it’s making a bigger downpayment on a home in an effort to avoid mortgage debt, handling a large home repair or medical expense without having to go into debt, or taking advantage of a particular investment opportunity that presents itself, not selecting a particular type of investment vehicle just because it’s the expected norm means that we allow ourselves to explore other opportunities while limiting credit costs.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.