There are a lot of variables that come into play when you are traveling on an airplane. Traffic and parking at the airport, security, weather delays, rental car or other transportation at your destination can all create a good or bad experience. A financial plan has a lot more variables than a typical flight plan when you consider longevity, spending needs, income sources, taxes, health care, estate goals, inflation, market volatility, and the list goes on. A good financial plan will allow you to factor all of those variables and provide a confidence level of being able to achieve your goals. Generally speaking a confidence level between 70-90% is comfortable target range. Keeping with the flight analogy, a score below the target confidence level would be like trying to cut it close getting to the airport, banking on no security line and walking right onto your flight. It may or may not work out for you. You may think why wouldn’t I want a 99% chance of success? That is a great question, but that would be like camping out at the airport the day before your flight. You won’t miss it, but at the same time you would give up a day that you won’t get back. If your confidence level is above 90%, that could mean you should consider spending more, retiring earlier, or planning to leave more of a legacy. Landing somewhere in the confidence zone sweet spot is like getting to the airport close to 2 hours before your flight so you can wait in a long line if necessary and still make the flight. Ideally you just have some built in relaxation time to go for a walk, buy some coffee, or visit a newsstand before leisurely boarding your plane. I don’t know about you, but the last scenario is most appealing to me!
For more information about our process for making sure your G.O.A.L.S.(Gather your information, Organize your financial picture, Apply your investments, Live and adjust, Service our relationship) are being met with confidence along with helpful screenshots from a sample financial plan, visit http://www.econwealth.com/we-plan-with-you.