“I’m not saying that I want to retire at 60, but I’d like the option to be walk away at 60 if I can.”
Derek and his wife, Keri, are both 45. He’s a commercial banker in Winston-Salem, and she works for a local non-profit.
They have two boys, Connor (12) and Mario (10) who play travel hockey and attend a local Christian school.
As you can imagine, they’ve committed a sizable portion of their disposable income to the boy’s travel hockey and private school.
And like many of you reading this email, they’re struggling to balance all the competing priorities; money, time, activities, etc.
Derek and Keri’s top priority is keeping the children in private school and allowing them to pursue their passion for hockey. They’re also concerned with the future cost of education and trying to figure out if there are any extra resources that can be allocated to help fund that.
However, as we alluded to up top, they would like to be “financially independent” by age 60.
Something had to give. Without a large compensation increase or windfall, there’s only so much money to go around. So, whether it’s hockey, school, retirement, funding future education, vacations, etc., Derek and Keri, despite their ambitions, can’t have it all (right now).
The optimal financial planning advice is to plan for your own retirement prior to planning for your child’s education and their future investments. Afterall it’s important to remember that your kids’ education can be financed, your retirement cannot.
We sat down, outlined their goals, reviewed their financial plan, and provided them with realistic expectations. Funding their current lifestyle and goals along with a future 60 y/o retirement probably wasn’t realistic.
We encouraged them to continue saving what they could today and to give themselves some grace. Take a vacation and enjoy the family time.
We also discussed that as amateur hockey comes to its inevitable end and private K-12 school concludes, they can redeploy that income toward their investments and work closer to their goal of early retirement options.
Given their financial plan, it’s probable that they could be financially independent at 63. Maybe not the news that they wanted to hear, but the news that they needed to hear.
I posed the question: “Would you rather be financially independent at 55 and your kids change schools, or financially independent at 63 and maintain the boy’s current situation at Christian School?”
They smiled together and Keri said, “Financially independent at 63 will be just fine.”
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A large portion of real-life financial planning is about providing a framework to ask questions, evaluate different options, and choosing the path that makes the most sense for you and your family. It all starts with a plan and a friendly conversation.
If you or someone you’re close to is a high-achieving professional that could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help.
Cheers, Nic
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific individualized investment, tax or legal advice for any individual. We suggest that you discuss your specific situation with a qualified, legal advisor and financial advisor.
