The future has not been written. That's your opportunity.
The New York Times had a great column last week on the futility of trying to predict the future or believing that someone can. The column addressed our desire to predict the contours of a post COVID-19 world. As I read it, I realized it is directly relevant to your finances -- and to what we do at Old Peak to help our clients.
The argument of the column is simple -- and, in my mind, spot on. Humans are desperate to divine the future, or to find someone who can. We hate uncertainty. Yet the future is unknowable. More specifically, the author wrote, "the future doesn’t exist. It will exist only after we have made it."
Careful planning in the face of uncertainty is the opportunity for each of us with our personal finances. That's why Old Peak exists: to help each client create the financial future they want, instead of worrying about what the future will bring.
Three examples of planning your financial future to handle life's uncertainty.
- Expensive nursing care for several years or beyond can erode retirement savings. Ask yourself if you could afford this and if not, consider buying long-term care insurance.
- If the stock market crashed just as you're about to withdraw for retirement spending, do you have enough cushion of bonds and cash to wait out the recovery? If not, consider modifying your investment mix.
- We have no way of knowing when we'll pass away or become incapacitated. But if you do, is your estate plan ready, authorizing someone to make decisions for you or distribute your estate to your heirs as you would have wished?
Financial planning is not about fortune-telling. No one knows what the stock market will do next month or next year. Don't bother asking.
Financial planning is about understanding which bad outcomes could damage your finances, and protecting against them.
I will hazard one prediction: if you do that, you'll sleep a lot better at night.