Last week I introduced you to Sally Starter. Fast forward 15-20 years and I’d like you to meet Mary and Mike Midlife. (From now on referred to as “The Midlife’s”.)
From time to time, I will get an email from a client telling me they have a friend that really wants to sit down with me and go through the same financial process that they just had. It’s always flattering when someone is willing to introduce good friends to me, as finances are an extremely private issue for most of us. In this case my client is friends with the Midlife’s. Mary is switching jobs and is likely facing decisions relating to her new benefits and what to do with her old 401K. The Midlife’s are trying to figure out if they are on track for college savings for their 2 children. More importantly, Mike wants to know if retirement at 65 is a realistic possibility. Always appreciative of being recommended by a current client and friend I will reach out the Midlife’s immediately. Very often I encounter a familiar problem: when can we find time that works for everyone?
Monday night? Nope the Midlife’s daughter has soccer practice, and their son has football, (depending on the current Covid situation!) so they will both be on the road.
Wednesday afternoon? Nope Mary will be in a mandatory 2-day training for her new job.
Friday? Sorry my son has a baseball tournament in NY this week and we are leaving first thing in the morning.
A family with 2 working parents and 2 or more active kids is the norm these days. Add in the fact that we as planners have kids and families as well, making schedules can be a challenge. Unfortunately, it seems to be one of the main reasons people never sit down to do any planning. Time is hard to find and they aren’t sure where to start. Fortunately (or maybe unfortunately), we have all become Zoom pros due to Covid. So, one thing I can promise you is we always find the time to make our meeting work. Having said that, I miss the days of more in-person meetings and hope they will be back soon, but my job is to meet clients however they feel comfortable. Whether that’s in person or virtual we will find the time to make it happen. The initial meeting in our process is especially important as we want to ensure that the fit is right for both the client and for us as we expect the financial planning relationship to last their lifetime.
Additionally, in that first meeting we need to gather as much information as possible. All the questions that are asked by the Midlife’s are good questions, but the answers need to be matched with the priorities of their goals. How much money is coming in, how is it being spent, where is it being spent etc.? What are the primary goals for you as parents? Is paying for college more important to you than saving for retirement?
We all have a finite amount of dollars to spend. By gathering that information about your assets, working together to set and, more importantly, prioritize your goals we can start to decipher if the savings is actually going to the places that will most efficiently help you achieve those goals.
At the first meeting with the Midlife’s, we will figure out what their primary goals are and set up a plan that they can get started on immediately. We will also discuss any stretch goals or dreams they might have such as purchasing a vacation home.
- Is rolling over Mary’s old 401K the right thing to do or should you leave it where it is?
- Given what the Midlife’s have already saved for retirement and combining that with assumed future contributions are they on track to reach their retirement target?
- How does that retirement nest egg translate into annual income for the Midlife’s and what might be the best ways to withdrawal it for maximum tax efficiency?
- Is Mary optimizing her benefits at her new job?
- How much will the Midlife’s be able to help contribute for college and are they saving in the right places to maximize potential financial aid?
- If something such as an unexpected death or disability were to happen are their estate planning documents in order? Is the plan built so that it is self-completing?
- Given all the other priorities the Midlife’s have is it even realistic to think about something like a beach house in the future to buy for the family and leave a legacy behind?
What’s important to understand is that there are so many of us in the same position as the Midlife’s, myself included. I think there is a common misconception that financial planners are sitting in front of a computer screen buying and selling stock all day. While that does happen, the bulk of our time is spent meeting with people like the Midlife’s…. getting to know them, getting to know their families, talking through the issues and fears they are having and helping them prioritize their financial goals so they can achieve them.
If you feel like you’re facing the same challenges as the Midlife’s or what I’ve written reminds you of someone in your life, we are happy to help. Even if it’s just picking up the phone to chat with someone.
Stay tuned for our next meeting with Rich and Rosie Retiree ….