I am currently “watching” (checking an online map as dots representing the competitors move across the landscape) Expedition Oregon. It is a 6 day unsupported adventure race. Racers plot their path to checkpoints across a 350 mile course while mountain biking (in unexpected snow), scaling 8,300 foot peaks (in unexpected snow), running rapids in a pack raft (in the unexpected snow), dipping under waterfalls (in unexpected snow), rock climbing (in unexpected snow), and more. All with just hours of sleep along the way.
Plotting the right path is a key part of this sport and teams often go off trail. While the most direct routes can be treacherous (or impassable), the risk can pay off. The easiest roads can add a lot of mileage. Throw in elevation gains and losses, the terrain and how weather impacts the terrain and you’ve got a really challenging puzzle to solve when selecting your route.
Navigation systems like GPS are strictly prohibited in adventure racing, but it certainly would be interesting to see an algorithmically perfected route, tuned for weather, unexpected trail closures (like downed trees), and the strengths of each individual team.
Financial mapping, a financial plan for your entire life is a similarly daunting path to plot. However, it isn’t that different from planning how to get from a physical point A to a physical point B.
It is possible to be be like an adventure racer, and use the equivalent of a paper map and highlighter pen to plot your financial route. However, employing the expertise of financial planners (either digital like the NewRetirement Planner or a licensed fiduciary fee only Certified Financial Planner®) can make the financial mapping process a lot easier. These resources can essentially serve as a deluxe navigation system for your money.
A good financial plan, like a well plotted route on a map, is like seeing into the future. You can project where you will be as you proceed along your route.
Financial Mapping: Where Are You Now and What is Your Ultimate Financial Destination?
The first step of any journey is to know where you are now and to set your ultimate destination.
For most people, the long term financial goal is being able to fund their life through longevity at a spending level at which they can live comfortably.
There is no one right financial map for everyone. Your perfect path to a well funded life can be tuned for your strengths and values.
I dabble in adventure racing, and prefer running/hiking and don’t really love steep downhill or uphill mountain biking. That said, I also am out there for the adventure, not winning. And, I kind of love the bragging rights of doing something miserable. So, my route would avoid biking when possible and prioritize the most interesting and maybe even audacious points along the way.
My strengths and values with regards to financial planning are similar. I love challenging work and am willing to take risks like starting my own company. I also want to prioritize my role as a mother and get as much out of life as possible. Luckily, I also like the interesting logistics of manipulating all the financial levers I have to live the interesting long life I aspire to.
Your financial plan should prioritize what you are good at as well as what you enjoy and value.
Work, saving, investing, spending levels, debt, insurance, and benefits are all examples of “transportation” to your ultimate destination of an adequately funded life.
You can deploy these levers in different ways over different time periods to help you reach your long term financial goals while also living the life you want, with whatever stopovers you desire.
The NewRetirement Planner goes well beyond savings and investments, enabling you to maintain a holistic plan, a comprehensive financial map.
When traveling, some people like the scenic route. Others prefer super highways or to take a meandering path with lots of stopovers.
Some people, like Financial Independence Retire Early (FIRE) devotees, want the most direct, fastest route to retirement – no detours whatsoever. FIRE adherents want to retire as early as possible, scrimping and saving every possible dollar, working side gigs and limiting spending to be free of work.
Most people take a more conventional path, balancing spending to enhance their life in the short term with strategic savings to retire in their sixties. There is time on the freeway at the speed limit with a 9-5 job and saving 20% of your income. However, there is also time for scenic roads and enriching stopovers.
And, then there are always people who may go off any kind of road entirely for some period of time and play catch up on the super highway later or live peacefully in more meager circumstances.
There are no right answers, just what is right for you. And, the NewRetirement Planner is designed to accommodate all kinds of plans.
No matter your vehicle and route, it really isn’t enough to plot one path to your destination. You need to know what to do when circumstances change. Inflation, stock market troughs, health events, natural disasters, and more can wreak havoc on the best laid financial plans.
The right insurance can prepare you for the unexpected. Strategies for your savings, like a bucket system can maximize your money for an uncertain future by ensuring you have cash available for living expenses if things go awry.
You want a plan that anticipates things that can go wrong and know what you are going to do when the unexpected happens.
In fact, you should probably plot a best case and worst case scenario plan or financial map. The NewRetirement Planner enables you to do this in multiple ways. You can:
- Monitor your optimistic and pessimistic assumptions
- Run different scenarios for different possible circumstances (a long term care need, more conservative investments and returns, a job loss, a work bonus, an inheritance, etc…)
- Evaluate your Monte Carlo analysis
In Expedition Oregon, the race organizers added snowshoes to the mandatory gear list at the last minute when they saw the snow forecast. Your financial plan can incorporate similar strategies.
You know taxes are in your future. Plan in advance to do Roth conversions or strategize to minimize taxable income. See tax insights and the Roth Conversion Explorer in the NewRetirement Planner to assess your tax situation.
Anticipate healthcare spending. The average out of pocket healthcare cost for a 65 year old couple is $300,000. A plan for funding this expense is critical to achieving your long term financial goals. The NewRetirement Planner can give you a personalized estimate for your out of pocket healthcare spending, using your age, location, health status, and the type of coverage you desire.
You can also build a projected budget for the rest of your life, the more detailed the better. And then, take steps to guarantee income to cover your spending wants and needs.
My number one rule when adventure racing? Don’t get lost.
It is imperative to be constantly checking the map to ensure that you are where you need to be. Check landmarks, trail crossings, measure time and distance passed. There is nothing worse than coming to the realization that you haven’t been paying attention and you suddenly have no idea where you are and need to backtrack to regain your bearings.
It can be similarly useful and gratifying to monitor your key financial metrics. What is your net worth now and projected to longevity? Are your savings on track? Is your spending in line with expectations? Are you making progress toward your goals?
Don’t get financially lost. Stay on track by monitoring metrics.
It is kind of frustrating but also reassuring when a GPS system starts spinning and the screen says, “remapping, stoppage ahead.” And, when I am out in the wild, I don’t mind rerouting to find a route better suited to new information and circumstances.
It is important that you do the same with financial mapping. You will not be able to anticipate every roadblock, accident, an interesting side trip, or breakdown.
When financial circumstances like inflation projections change, you need to make adjustments to your plan with the updated information and, when necessary, plot a new route to your goal.
Life is hopefully long and interesting. You will likely make significant adjustments to your financial plan over time. We recommend that you walk through your entire plan at least quarterly to update your data and make adjustments as necessary.
We are proud of the NewRetirement Planner and how it can serve as a guide or financial mapping to your goals(s). Building and maintaining a financial plan improves financial habits, decisions and outcomes.
We also know you sometimes need some extra support. Did you know we also offer:
- Coaching: Walk through your plan 1:1 with a NewRetirement coach. Make sure your inputs are accurate and learn about advanced tools.
- Classes: Enroll in our 8 week session about how to best use the planner. Or, try our more in depth classes covering tax planning, portfolio and asset allocation strategies, building your income plan, and meeting your goals for spending, stewardship, legacy, and asset transfer. (Log into the Planner and click on “Classroom” in the left hand navigation.)
- Fiduciary Fee Only Financial Advice: Do you think you need professional guidance and reassurance? Sign up for a free discovery session.