The Importance of Having a Master Plan

One of my clients, I’ll call Sherri is a 45-year-old postal worker. Recently divorced, Sherri wants to make sure that when she turns 65, she will have enough in savings to retire.  I have been helping her create a “master plan” to help her see where she is today and where she needs to go.  A master plan is like a post you plant in the ground. By having that “post” in place, you can be tethered to your desired goals.  Even as the winds of change blow you about, you will still be tied to your desired end result.  Without a master plan, you are secured to nothing and the winds of change may blow you completely off course.

In order to develop your own master plan, you will need to combine that which you already know about spending and borrowing with some long-range planning.  Then, you will need to forecast what you must do today in order to achieve those future goals.

Creating a Master Plan:

1.  Decide the age you want to retire.

2.  Determine how much money you will need at retirement.

3.  Look at plans you already have in place to help you receive your desired income.

The secret principle. I have fund that my clients, once they have a master plan in place, begin to get a real sense of what their financial future looks like.  In the areas where they come up short, they make plans to make up the difference.  When people can see the reality of their retirement and their financial future as it’s really going to be, they usually make some very serious changes!

Sherri is just one person who has been empowered to change because of developing a master plan. With this plan and the help of Money Mastery’s forecasting tools, she has identified what she thinks her retirement needs will be.  She’s currently grossinggrow-their-money $35,000 a year and has estimated that she will need 80 percent of that to retire comfortably, or $28,000 a year.

The forecasting tools have helped her assess what funds will be available to her in the future.  She has determined that she will get $13,000 from Social Security annually, a $5,000 per year company pension, and $2,400 from a duplex she owns.  When all of these outside income sources were totalled, Sherri found that she will have $20,700 in annual income she can count on at retirement.  This means that she will be $7,300 short each year.  She told me it was depressing at first to realize that she had to save $161,330 by the time she reached 65 to be able to retire, but broken down, that was only $300 a month.  Having to save didn’t make Sherri all that happy,  but I pointed out to her that without a master plan in place now, she would not have seen what needed to be done now and might have waited until it was too late to come up with even $300 every month.

Having a master plan makes all the difference. If you want more information about this kind of financial planning, call me (801) 292-1099, ext. 1.