I’m an avid spectator and participant of adventure races. The expedition races that I follow (and monitor via online maps) are 3-6 day races held all over the world. In adventure races, racers plan routes to checkpoints over 300 miles (usually 50-100 miles per day) while mountain biking, rock climbing, whitewater rafting, trekking, and more, all while surviving on only a few hours of sleep in the process.
Figuring out the right path is an important part of the sport. There is no set course and you don’t have to follow a set path.
While GPS and other navigation systems are strictly prohibited in adventure races, it would certainly be interesting to see routes algorithmically optimized for weather, unexpected trail closures (fallen trees, etc.), and each team’s physical fitness.
Financial mapping, or creating a lifelong financial plan, can be just as challenging as plotting a path for an expedition. In both cases, you’re trying to figure out how to get from point A to point B.
Like an adventure racer, you could plan your financial route with a paper map and highlighter. However, leveraging the expertise of a financial planner (either a digital planner like NewRetirement Planner or a licensed fiduciary fee-only Certified Financial Planner®) makes the financial mapping process much easier. These resources essentially act as a deluxe navigation system for your money.
A good financial plan is like predicting the future, like a well-drawn route on a map. As you progress along the route, you can predict where you will be.
Financial Mapping: Where are you now and what is your ultimate financial goal?
The first step in any journey is knowing where you are and setting your final destination.
For most people, the long-term financial goal is to live long enough to be able to fund their lifestyle at a comfortable spending level.
Understand your strengths and values
There’s no one right financial map for everyone, and your perfect path to a well-funded life can be tailored to your strengths and values.
I don’t do multi-day adventure races, but I do take part in 12-30 hour challenges. Running and hiking are my forte, and steep descents and ascents on mountain bikes aren’t my favorite. That said, I’m in it for the adventure, not to win, and I also like the bragging rights of being miserable. So my routes tend to avoid bikes whenever possible, prioritizing the most interesting, and sometimes daring, points along the way.
My strengths and values when it comes to financial planning are similar: I love challenging work and am willing to take risks like starting my own company. I also prioritize my role as a mother and want to get as much out of life as I can. Luckily, I also love the interesting logistics of juggling all the financial levers to live the long and interesting life I aspire to.
Your financial plan should prioritize not only what you’re good at, but also what you enjoy and value.
What means of “transport” are available?
Jobs, savings, investments, spending levels, debt, insurance, and benefits are all examples of “means of transport” to the final destination of a well-funded life.
By deploying these levers in different ways over different time periods, you can achieve your long-term financial goals while living the life you want, with stopovers along the way that you desire.
The NewRetirement Planner goes beyond savings and investments to help you maintain a holistic plan – a comprehensive financial map.
Choose your route: What stopovers or detours do you want to take?
When traveling, some people prefer to take the scenic route, while others prefer to stay on the highway or take winding roads with lots of stops along the way.
Some people, like Financial Independence and Retire Early (FIRE) adherents, want the most direct and fastest route to retirement — no detours at all. FIRE adherents want to retire as soon as possible, so they save as much as they can, take on side hustles, and limit non-work-related spending.
Most people choose a more conventional path, balancing short-term lifestyle spending with strategic savings for retirement in their 60s. You’ll have time to drive down the highway at the speed limit while working a 9-to-5 job and saving 20% of your income, but you’ll also have time to enjoy scenic roads and quality stops.
And there are always those who go completely off any kind of path for a period of time, only to catch up later on the highway or live peacefully in more modest circumstances.
There’s no right answer, only what’s right for you, and the NewRetirement Planner is designed to accommodate all kinds of plans.
Prepare for the unexpected
Whatever your vehicle or route, planning one route to your destination isn’t enough. You need to know what to do when circumstances change. Inflation, stock market downturns, health issues, and natural disasters can wreak havoc on even the most carefully laid financial plans.
Having the right insurance can help you prepare for the unexpected, and savings strategies like the bucket system can help you set aside cash for a rainy day to cover living expenses and maximise your funds for an uncertain future.
You need a plan that allows you to anticipate when problems might arise and know what to do when the unexpected happens.
In fact, you should create a best-case and worst-case scenario plan or financial map. The NewRetirement Planner allows you to do this in multiple ways. You can:
Monitor optimistic and pessimistic assumptions
Run different scenarios for different situations (long term care needs, more conservative investments and returns, job loss, work bonus, inheritance, etc.).
Evaluating the Monte Carlo analysis
Prepare for anticipated events
At the recent race, Expedition Oregon, race organizers added snowshoes to the list of required equipment at the last minute after snow was forecast. You can incorporate a similar strategy into your financial plan.
You know you’ll owe taxes in the future. Plan ahead for a Roth conversion or develop a strategy to minimize your taxable income. Check out NewRetirement Planner’s tax insights and Roth Conversion Explorer to assess your tax situation.
Project your medical expenses: The average out-of-pocket medical expenses for a 65-year-old couple is $300,000. Planning to cover these expenses is essential to reaching your long-term financial goals. NewRetirement Planner can provide you with a personalized estimate of your out-of-pocket medical expenses based on your age, where you live, your health, and the type of coverage you want.
You can also create a budget for the rest of your life — the more detailed the better — and take steps to ensure you have an income that will meet your spending wants and needs.
Measuring progress
My number one rule when adventure racing is: don’t get lost.
To ensure you reach your destination, it’s essential to constantly check your map. Look at landmarks and trail junctions, measure the time and distance you’ve traveled. There’s nothing worse than realizing you weren’t paying attention, suddenly not knowing where you are, and having to turn back to get your bearings.
Monitoring your key financial indicators can be just as rewarding and rewarding: What is your current net worth and what do you expect your net worth to be in the future? Are your savings on track? Are your spending on track? Are you on track toward your goals?
Don’t get lost financially. Monitor your metrics to stay on track.
Remap as needed
It’s a little frustrating, but also reassuring, when my GPS system starts spinning and the screen says “Remapping, Road Closed Ahead.” And when I’m out in the field, I don’t mind rerouting to find a better route for new information or conditions.
It’s important to do the same with financial mapping: you can’t predict every obstacle, mishap, interesting detour, or breakdown.
If your financial circumstances, such as inflation projections, change, you’ll need to adjust your plan based on the updated information and, if necessary, plot a new route to your goal.
Continue remapping
Life is long and interesting, and hopefully you’ll make significant adjustments to your financial plan over time. I recommend reviewing your entire plan at least quarterly, updating your data, and making adjustments as needed.
What resources are you using to chart a path to your financial goals?
We are proud that the NewRetirement Planner serves as your guide and financial mapping to reach your goals. Creating and maintaining a financial plan will improve your financial habits, decisions and results.
We understand that sometimes you need extra support. Did you know some of the services we offer include:
Coaching: Review your plan one-on-one with a NewRetirement coach, ensure your inputs are accurate, and learn how to use tools to answer your questions.
class: Sign up for an 8-week session to learn how to get the most out of your planner. Or try a more in-depth class covering tax planning, portfolio and asset allocation strategies, creating an income plan, spending, management, estate and wealth transfer goals, and more. (Log in to your planner and click[クラスルーム]Click.)
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