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How to Make a Plan to Achieve Financial Physical and Emotional Goals

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How to Make a Plan to Achieve Financial Physical and Emotional Goals

Quality of life. It’s something people at every age talk about, and some go to great pains to make it happen.
 

But how do you actually define “quality of life”?

For one person, it may mean working less, downsizing as much as possible, and spending more time with family and friends. For another, it may mean working more (hopefully at a fulfilling job) to fund more travel or afford other luxuries.

Regardless of your choices, money often plays a role, both before and during retirement. That’s why creating a personal financial plan to support your goals—whatever they may be—is essential. But that’s not always as easy as it sounds.

John and Judy are in the “catbird seat of life.” They’re 68 years old, still working, healthy, and mobile. They’re in the peak of their earning years with no plans to retire any time soon. Unlike a lot of Baby Boomers, they’ve done a great job saving for retirement, and their investment assets recently topped $1.5 million. But achieving a high quality of life hasn’t been that easy—at least for John. His father worked as a doctor until he was in his late 70s, so John feels pressure to keep working another decade to “add to our nest egg.” And while he loves his job, finding balance between work and play has been an ongoing challenge for him. Yes, he plays golf now and then, and he and Judy finally took a long-awaited trip to Europe last year. But his time away from the office is rare. When he does take time to relax, his outgoing personality shines. His favorite leisure activity is dining with friends—often in friends’ homes.

The last time John and I sat down to chat, I asked him what he’d like to do this year to enjoy life more. He was quick to answer: “I want to update our house,” he said. “We haven’t done any major improvements in 20 years. I love to cook, but the kitchen is outdated, and the bathrooms and floors all need updating. I’ve priced it out, and we’re looking at $75,000 to $100,000 to do it all. But where should the money for that come from?”

At 68, I knew the last thing they should consider is leveraging their HELOC (Home Equity Line of Credit). They still owe $350K on their house, and even though the interest rate is just 3.25%, their monthly payment with property taxes and insurance is $2,400 a month. As we brainstormed options, John mentioned a $100K savings account that’s sitting in the bank earning almost 0% interest. It seemed like the perfect solution. But there was a glitch: “Judy doesn’t want to touch it,” he said. “She calls it her ‘comfort money,’ and it’s the one piece of our savings that’s always been off limits.”  

As their financial advisor, I’m well aware that John and Judy have more than enough in investment assets to fund their retirement—especially since John wants to continue to work indefinitely. Plus, they can take $100K from their investments any time they need it and receive the funds in two business days, so Judy’s “comfort money” isn’t financially necessary (especially at 0% interest). But because Judy views it as money they might need for medical care, assisted living, and other late-in-life expenses, it feels emotionally necessary to her.

Last week, I met with John and Judy together to see if we could find a solution that they both could agree on. As we talked, the challenge became clear: John and Judy share a financial life, but they define “quality of life” very differently. John values entertaining friends at their home, but he’s embarrassed because the house is so outdated and uncomfortable for guests (and for him) without the renovation. Judy, on the other hand, is an introvert. “I need a financial security blanket,” she told me. “I’d rather make do with the house as it is than spend money we might need when we can’t work any longer.”

It’s not an easy situation, but I’m so glad we had the conversation. John shared about his desire to have the beautiful home he’s proud of and can entertain in, but he said he didn’t want to threaten Judy’s need for security. She understood how much it meant to him, but the fear of touching her “comfort money” made her feel paralyzed.

To assuage Judy’s fears, I showed her exactly what assets they had saved and how much John was continuing to contribute while he worked. Then we compared their savings to estimated expenses, even in a worst-case scenario. Next, we talked through her financial fears. When she learned that money from their investment account could be in their checking account in two days with no penalty—and that the invested money would grow over the next decade to provide more assets in the future—her fears began to melt. John offered to keep the budget to $75K so Judy would still have $25K as an additional security blanket. When I added that much of the work on the house would need to be done anyway if they decided to sell in the future, she decided using the savings was the right choice. Perhaps even more importantly, Judy said that having people in their home increased her quality of life as well. Mission accomplished.

Quality of life is important, no matter what your level of assets or what your age. The key is identifying what will really make you happy, and then putting a plan in place to work toward those goals—financially, physically, and emotionally. That “three-legged stool” becomes more important as we age, so the more you can do to control the things you cancontrol today, the more likely you’ll be able to achieve your own quality of life, however you choose to define it.

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