Get ready for the ‘what-ifs’

By Whitney McDaniel

The future holds many uncertainties, and your retirement is no exception: “What age should I retire?” “How long will I live in retirement?” “When should I start taking Social Security?” “How will rising medical costs affect me?” That’s why planning is so critical, and a good plan will take into account many of the possible uncertainties. In the process of developing your personal retirement plan, it’s important to map out these “what-ifs” — the scenarios, priorities, and choices that you’ll build into your strategy.

For example, you may have realized that your retirement priorities include spending as much time on the water as possible or staying in your lifelong home. Each represents a significant expense — perhaps a new cabin cruiser, or extensive aging-in-place upgrades and a long-term care policy — that would affect not only your retirement lifestyle but also your retirement finances.

Each priority generates questions: What if you paid up front? What if you chose financing? How would one or the other affect your monthly income, investments, and legacy plans? Other unexpected developments may arise, such as your company offering you an early retirement package. You may then need to decide whether you can afford to accept the early retirement package or forgo it and continue with your predetermined retirement date. Or perhaps you can re-prioritize certain goals so that you can afford to take the early retirement package.


Turning What-ifs into a Plan

“Exploring the what-ifs allows you to try on decisions before you actually have to make them,” says Greg Shiveley, first vice president of FA Platform, Strategic Solutions Group, Wells Fargo Advisors. “You’re able not only to design a retirement lifestyle that reflects your priorities but also to have added confidence that you’ll be able to achieve it.”

The process starts with narrowing down the list of what-ifs to those scenarios most applicable to your circumstances. A couple for whom assisting family is a priority might explore the repercussions of offering financial assistance to an adult child or having an older relative move in — or both. A single person for whom independence is a priority and who has a family history of living to age 95-plus will have a very different “what-if” conversation with his or her Financial Advisor.

Shiveley notes that exploring what-if scenarios can be especially useful when a couple or individual has multiple high priorities, which may have come to light during a priority-setting exercise with their Financial Advisor. “It’s an opportunity to examine the implications of giving one goal higher priority than the other, as well as what would be required to achieve both priorities,” he explains. One outcome may prove vastly preferable to another — or small trade-offs or strategy changes could make achieving both goals possible.

Working through the options with someone you trust who also happens to be familiar with your finances and personal preferences — namely, your Financial Advisor — greatly simplifies the process. Regardless of the strength of that relationship, however, you remain in the driver’s seat. “While your advisor is there to provide insight and support, ultimately you make decisions about how to proceed,” Shiveley emphasizes.

What’s more, you can return to the what-if process whenever you’re faced with a major decision or a change in your circumstances. “The reports and plans that come out of this exploration are not something you just put on a shelf,” Shiveley points out. “They’re living, breathing documents that can adapt with you.”

This article was written by Wells Fargo Advisors and provided courtesy of Whitney McDaniel, CFP®, Financial Advisor in Beaufort, SC at (843) 524-1114. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE. Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.

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