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Are You in Your Confidence Zone?

Everyone wants to feel confident in where they are in life, and in where they are going. For some, confidence is a feeling they just seem to be born with. For others, confidence comes unexpectedly. For others still, confidence is something that is earned. Everyone achieves confidence in their own way. Retirement is no different. Regardless of the path taken, what we can say for certain is that retirement is something that we earn. And, when we earn the ability to retire, we should feel confident about our decision.

The Employee Benefit Research Institute found in 2018 that 25% of employees are either not very confident, or not confident at all about their retirement. This comes at a time when the Social Security Administration estimates that close to 10,000 baby boomers are retiring every day. This tells us that there is a need for a change.

Through conversations with our clients, we’ve come to realize that retirement is not just a number. Retirement is made up of goals, sometimes many goals. You want to be able to meet your day-to-day expenses. Perhaps you also want to travel, buy a new car, or help pay for your grandchildren’s education. We call this goal-based planning. We look at factors such as the amount you want to spend on your various goals, duration and importance of each goal, and the income and assets available to fund your goals. From this, we can determine the probability that you will be successful in meeting your goals. We call this probability of success the Confidence Zone. When you have a 70% to 90% probability of success, you are within your Confidence Zone. When all of your goals cannot be funded, we look at the ones you ranked asmost important and fund them first. We will always work with you to make necessary adjustments so that you can fund as many of your goals as possible.

This is all part of an ongoing financial planning process, not an event. We encourage annual updates to your plans because we know how things change. Maybe you only have a 50% probability of success at the moment. Our hope is that the sooner you know this, the sooner we can help you make the necessary adjustments to increase your probability of success. It could be that you have a 98% probability of success. Maybe this means that you are sacrificing too much today. Perhaps you could spend a little more today or in retirement. Maybe you could increase the amount that you plan to give to charity. Maybe you can travel more.

Whatever path you take, what is certain is that circumstances will always change. Grandchildren may come along that you’d like to provide college savings for. The ups and downs of the markets will certainly affect your portfolio. You could finally take that vacation you’ve been putting off. But, what shouldn’t change is your confidence in knowing exactly where you stand in terms of your retirement. We want your retirement to be enjoyed with family and friends in pursuit of your passions. And, we want you to be in your Confidence Zone as you prepare.