How do you rate your financial shape? After 20 years of helping people plan for retirement, I've learned there are some parallels between a person's financial fitness and physical fitness.
First, ask yourself if you keep track of the daily financial headlines and whether the inevitable market fluctuations make you uneasy or put you in a bad mood. You'd be amazed at how many people are like that. It's kind of like stepping on the scale every day when you are trying to lose weight. That can be a frustrating way to live.
Whether you're talking about financial or physical fitness, all of us can benefit from having a dependable professional to guide us, nudge us and offer new ideas.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
I hired a fitness trainer four years ago because, even though I had my own workout routine at the gym, it was stale. I always did the same stuff: lots of upper body work and barely any leg days. I wasn't crazy about cardio either. And I missed workouts when things got busy on the job.
My trainer changed everything. Now I get up at 5 a.m. every morning, do my pre-workout checklist, meet my trainer at 6 a.m. and crank out new and interesting workouts thanks to his plan. I show up every day because, if I don't, I still have to pay him, and I don't like giving money away!
Cardiovascular workouts are a lot like budget planning. Many people hate doing cardio, just as they hate creating a budget.
Put together a real budget; few people do so. When I ask clients how much money they need a month for basic necessities, they can't give me a number. Just as my trainer tells me I need to do cardio work, I tell my clients they need a budget.
When I build a plan for retirement, I break people's finances into two categories: the necessities and the discretionary spending. Examining exactly how you spend money can be a painful exercise, but it is pivotal to creating a solid retirement plan.
Now I love leg day at the gym. I used to avoid it. Leg day is similar to estate planning. People tend to avoid estate planning because it makes them think about the end of their own race. The last time they updated their will was when their children were born. Maybe they never even got around to drawing one up.
It's easy to put off leg day, and estate planning, by telling yourself you'll get to it, eventually. That's when my trainer, and an estate planning attorney, can help. It's so much easier when the coach tells you, "Okay, today is leg day. We're not going to avoid this any longer."
Eating right is like having the right retirement plan. If you eat better, you build muscle, you get stronger, and you can run farther with less fatigue.
To help can create a better retirement plan you should focus on five key elements:
If you commit to these goals for your money, then you'll earn an off day! The off day, physically, helps your body relax and recuperate. In the context of your finances, it means having more confidence when the stock market dips. Now you can comfortably take your eyes off those bad headlines.
Remember, you want to be able to focus more on your life and less on your money. Just as being physically fit makes you feel better and live better, you'll reap the same rewards from your efforts to become financially fit.
Bill Smith is CEO of W.A. Smith Financial Group and Great Lakes Retirement, Inc., as well as an Investment Adviser Representative and insurance professional. His firms focus on retirement planning and wealth management.
Dave Heller contributed to this article.
-
How GLP-1 Drugs Could Revolutionize RetirementGLP-1 drugs like Ozempic and Wegovy are already changing the way we age and manage chronic conditions.
-
How to Invest in the Nuclear RevolutionAccording to Energy Secretary Chris Wright, "The long-awaited American nuclear renaissance must launch during President Trump's administration."
-
How to Avoid These Five Costly Tax Mistakes That Many Retirees MakeMaking incorrect assumptions about tax brackets, tax-loss harvesting, charitable giving, estate taxes and more can cost you big-time in retirement.
-
Are You a Baby Boomer With $500,000 or Less Saved for Retirement?Here are seven ideas Baby Boomers can consider to help make the most of their financial resources for retirement.
-
Social Security Fairness Act Adds to Pressure on Safety NetWhile the law seeks to level the playing field for many federal employees, the sustainability of the Social Security system is now facing even more challenges.
-
Four Ways to Financially Embrace the Year of the Wood SnakeIn the Year of the Wood Snake, consider looking to the snake's traits of being strategic, cunning and alert to help guide your finances this year.
-
Five Wins for Federal Employees in the Social Security Fairness ActMore money means more opportunities and financial stability for current retirees and future retirees.
-
Three Ways to Get Your Finances in Better ShapeWant fitter finances this year and beyond? Start by making full use of all your workplace benefits — from 401(k)s to budgeting apps and wellness programs.
-
Rethinking Income When You Retire: No Paycheck, No ProblemWhen you retire, you'll need to adjust to the reality of depending on assets instead of a regular paycheck. For that, you'll need a new financial strategy.
-
How to Support Your Parents Without Derailing Your FinancesPutting your aging parents' financial house in order can give you a clearer picture of where they need support and how to balance that with your own plans.
