Financial Planning – Part III

This is the final article on Financial Planning. Today we begin with establishing an annual target and a long-term goal, and finish up with adjusting the plan, as needed, to achieve your goal … retirement preparedness and peace of mind.

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The Seven-Step Financial Planning Process (continued) 

3.  Establish a Target and Goal: There is an old business saying, "If you cannot measure it, you cannot manage it." Now that you know how much is needed in retirement savings and over what period of time, creating achievable goals including annual targets becomes important. Goals and targets should be specific, measureable, actionable, reasonable, and time bound. For my wife and I, we focused on saving 15-20% of our income every year (depending upon bonuses, other compensation, and interest/dividends).   

4.  Execute the Plan: Plans are not very good unless you implement them. Develop an action plan with specific steps that need to be taken and the timing to achieve the targets and goals. Steps that are not measured or assessed cannot be managed because there is no objective information to determine its value. Desired performance outcomes must be established for all steps in the plan.  After you and your wife are both comfortable with the plan, execute it

Fortunately, our company offered a 401K program that we max'd out each year. We also max'd out our IRA contributions. We were also able to defer a portion of our income and bonuses. Whatever the shortfall was between our annual savings target after the 401K and IRA contributions, we invested (stocks, bonds and CDs).

5.  Measure Performance: Schedule time each quarter (or at least semi-annually) to review how you are doing in reaching your short-term savings target. If you are not on track, determine what needs to be done to get you back on the right path. 

6.  Review Results: Circumstances change, so it is important that you review your plan annually. Ask yourself how well you did the previous year in regards to your long-term goals and short-term target. Have your expectations (wants and needs) changed because of health concerns, family circumstances, employment considerations, or economic issues? 

7.  Adjust the Plan: This is just as important as the initial planning process. If anything changed or you did not achieve your target for the previous year, you need to revise your plan.

Because the stock market, interest rates, bonuses, salary increases, stock options, etc. are not consistent (or do not always follow your plan), you will most likely have to revise the plan and set a new target every few years. You might also have to change your goal if something catastrophic occurs. If you are ahead of your plan and want to grow your retirement "nest egg" even further, you might decide not to modify the plan. The key is not to take your eye off the goal (i.e., your total needed retirement savings).

As I mentioned in Part I, Social Security-Disability is all well and good, but it does not help answer the question whether you can afford to retire. Financial planning is important at any age, but it becomes critically important when diagnosed with Kennedy's Disease because you might have to retire earlier than expected. 


I realize the planning process and recommendations included in this article might sound difficult to complete, but just take it one step at a time and it will all fall into place. Remember, you can always hire a financial planner to help you with the task. What is important is that you just "Do It!"

 

Other Planning Considerations

1. Short and Long-Term Disability Insurance: If you have not already done so, you need to check with Human Resources to see if something similar is offered through your company. Disability insurance will replace a portion of your lost income when you are no longer able to work.
   
   
   
   
   Although this insurance receives less attention than health insurance, it is equally as important if forced to retire early because of a disability. Wikipedia has a nice article explaining the different types of disability insurance. The monthly premiums were well worth the sacrifice for me. If your company does not offer these type programs, check to see if you can afford to purchase one on the open market. Fortunately, my company offered disability insurance.
   
   
   
2. Document Everything: Once you have your plan and are reviewing it regularly, prepare for the future by documenting everything associated with the disease. This is very important because you tend to forget or misplace things as the months and years pass. All of this information will become important as you begin the application processes for Social Security-Disability and short/long-term disability insurance.
   
   Document everything related to your experiences with Kennedy's Disease including test results and doctor's visits. Ask your doctors for copies of all examinations and tests. Set up a spreadsheet that records all of your falls and injuries (date, at work or home, reason, injuries, etc.). Incorporate all this information into a three ring binder with tabbed sections.
   
   
   
3. When to begin discussions with your company: You do not need to do this right immediately and the timing depends a lot upon your relationship with your manager and human resources (HR). At some point, however, you need to bring them up to date on your situation and request their support.
   

• Regularly evaluate your current work experience (capabilities and concerns) and decide the best time to begin these discussions. Your safety is important to you, your family, and the company.
  
  
• Human Resources will be able to review programs available and, when you are ready, early retirement options. For me, after I made the initial ovation, I found HR and my manager were willing to work with me to help prepare for the future.
   
• Since Kennedy's Disease is a RARE disorder, I found it important to educate my manager and HR as to what to expect. I provided them with articles from the internet concerning symptoms, progression, etc. Just mentioning the health issue will make them begin to ask questions that they will need answers to regarding plans for any future transitions in workload, responsibilities, etc.

• Since they know nothing about Kennedy's Disease, some reassurances will be necessary as to current and future capabilities. Fortunately, Kennedy's Disease does not affect cognitive powers and it is a slowly developing disease. Your positive attitude and assurances that you will keep them apprised of any changes is important.
  

 
Note: I plan to develop a PDF guide on this subject in the future. The guide will be available for download on the KDA website.

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As always, should you have any questions, please do not hesitate to ask by commenting below or sending me an email.


Okay, now it is your turn. What did I forget? What do you not agree with?  Do you have a better process you can recommend? Any comments and considerations are appreciated. Working together, we can make a difference.

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Upcoming Article: Check out Sunday's article on the natural history of spinal and bulbar muscular atrophy (SBMA). I will summarize the research report as well as provide a link to a site to download the study if you want to read it.