By Brad Stark, Published in the Montecito Messenger’s
“Montecito Money” column on January 20, 2012
Do you worry about money? Do questions often arise in your mind such as “Do I have enough? Am I taking too much risk with my investments? Will I be able to maintain my current lifestyle throughout my retirement? Can I support my children, grandchildren and charities to the degree I’d like?” If questions of this type have ever kept you up at night, congratulations! This shows you are someone who is aware enough about money to be contemplating such questions and. Now, let’s spend some time addressing these worries and see what you can do to possibly alleviate them.
Webster’s dictionary defines worry as “to subject to persistent or nagging attention. Mental distress or agitation resulting from concern for something impending or anticipated.” So when a person has wealth worries, they may be experiencing mental distress about money issues at a future point in time. By realizing that these worries are a fear-based projection into the future, we can remind ourselves that it is not our current reality, but only our fears being played out in an unconstructive way. To regain a healthier, more peaceful perspective, consider the following two exercises:
- Ask yourself, am I financially OK right now? Are you living in a comfortable home, eating sufficient meals, enjoying a decent lifestyle? By focusing on the present, you can calm your mind from the fearful scenario it tries to paint into your future.
- Once you are feeling secure in this moment, then you can objectively (and with professional financial help if needed) asses the path you are on and determine specific actions you can take today to optimize your finances in the future. By becoming educated to how the financial components of your life work together to generate predictable cash flow (including pensions, Social Security, rental real estate, IRA distributions, taxable investments and potential inheritances) you will have a clear understanding how your lifestyle will be supported.
While the media tends to feed our fears, and promote various “doom and gloom” factors that could derail our financial independence in retirement, it is important to note the positive factors as well. Examples of this would be the fact that aside from health care costs that can be mitigated with long-term care insurance, retirees could typically spend less as they get older. This reduction in spending is often not anticipated. Earned income as a senior is also not often factored in, and yet some people find themselves stepping out of their traditional retirement with some part-time work or involvement in consulting projects that generate income to help with their household expenses.
Probably the greatest factor that is often overlooked is the fact some people don’t take into account their home values with their retirement planning. Most people love their homes and assume they’ll remain in them until the day they die. But this often is not the case. Whether due to a downsize move to be closer to town and reduce the upkeep responsibilities or due to a health need that requires assisted living support, some people in the 93108 zip code have significant equity in their homes that has not been factored into their financial plans. This added infusion of capital when one is in the later phase of their life can become an added safety-net to their financial well-being.
If you are among those who struggle with feeling anxious about money, please know this is a voluntary practice. With proper education and perspective, you can stay present in your life and enjoy the abundance you have today, while also taking productive steps to achieve your financial goals in the future. With outside help, you can consider the path you are on now to see, with an informed degree of probability, what your finances in the future may look like. By removing the guesswork and any fear-based influences from your mind, you can feel at ease with regard to money issues in your life.
Author’s Note: Brad Stark, MS, CFP, AAMS, CMFC and Seth Streeter, MS, CFP are Co-Founders of Mission Wealth Management, LLC, a Registered Investment Advisor. The information contained in this article is general in nature and should not be construed as comprehensive financial, tax, or legal advice. As with any financial or legal matter, consult your qualified securities, tax, or legal representative before taking action. Securities offered through National Planning Corporation, Member FINRA/SIPC. NPC and MWM are separate and unrelated entities. Certain statements contained within may be forward-looking statements, including but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties; all statements are subject to change without notice. Also, historical performance cannot predict future results. The authors can be reached at firstname.lastname@example.org.