Every day, you’re bombarded with important numbers: telephone numbers, account numbers, your kids’ Social Security numbers (that you can never remember as you’re filling out insurance forms). When it comes to investing, you have even more figures coming at you: where the S&P 500 closed on Friday, how your 401(k) is performing and your current savings rate, to name a few.
Luckily for you, there’s actually only ONE number you need to know when it comes to your retirement. It’s what we call your PROBABILITY OF SUCCESS, or your likelihood of living the retirement lifestyle you want versus what you’d be stuck with if you didn’t plan in advance. If you haven’t yet gone through this process with YOUR investment advisor, it goes a little something like this:
Question 1: Where are you RIGHT NOW?
Specifically, how much are you saving and how are you investing those dollars? We also look at how much you’ve already accumulated for retirement, including your current and old 401(k)s and your Individual Retirement Account(s).
Question 2: Where do you WANT to be?
What we mean is, what does retirement look like to you? Where do you plan on living and what kinds of activities will fill your days? What sort of retirement lifestyle do you envision for yourself?
Question 3: How are you going to GET there – AKA what is your PLAN?
This is where we crunch the numbers. We determine your probability of success in achieving your goals based on your current strategy. For example, John and Jane – prospective clients we recently met with – had a probability of success of less than 50{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} based on what they were doing when they walked into one of our offices.
Know what we told them to do to help IMPROVE their probability of success? Just three things:
- Slightly increase their savings rate;
- Move from a conservative portfolio to a more moderate one (with a slightly higher allocation to stocks); and
- Rethink their timing for claiming Social Security.
And you know what? When we crunched the numbers based on this new strategy, John and Jane’s probability of success went from LESS than 50{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} to almost 90{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}!
Remember that your probability-of-success number is not a static number. It can change based on what the market’s doing or what’s going on in your life. It’s like your blood pressure – you don’t go and get your blood pressure checked once and then never do it again. You have to keep re-checking your number to make sure it’s where it needs to be!
If you’re wondering what YOUR probability of success is, contact a local advisor with The Mutual Fund Store® today. Our No. 1 focus is helping you get where you want to be, but we can’t do it without you.
SOURCE: Expert Investing Insight – Read entire story here.
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