Your Future Doesn't Need a Fortune-teller

Have you thought about the future you wantfor your family 20 years from now? If not,there is no better time than the present tobegin to make a road map.

To have $1 million saved by age 65, you would onlyneed to invest $4 a day, or $1440 a year if you startedat age 20. If you wait until you are age 50, however,you would have to invest $95 a day, or $34,200 a year,assuming a 10% annual return. Also, if you start later,you will need to place a higher percentage of your savingsin fixed-income investments, which offer greatersecurity but lower returns.

The Number

Unfortunately, too many people have put off savingfor retirement, lured by the next vacation, a bigger house,or other luxuries. According to Lee Eisenberg, author of, only one in four workers aged 55 andolder have investment assets of more than $100,000,and one in three have less than $50,000. If you thinkabout what you live on annually now, it is clear thatthese individuals will have a very meager retirement.The result is that retirement will be pushed farther offfor many people. While many doctors enjoy working,the fact is, sometimes health issues or life-changingevents necessitate retirement before they would like.

An important first step is to discuss your goals andplans with your family. Talking about money is difficultfor many couples, so focus on what you bothwant for your lives and your future, rather than thedollars. Then, once you have an idea of the future youwould like to have, you can work backwards to createthe savings and investment plan that will get you toyour goals. Remember, no one saves money for thesake of saving money, but rather to reach their goals.Write these goals down and look at them periodicallyto be certain they are still appropriate.

It also helps to engage the expertise of a financialplanning professional, who can focus you on the practicalissues of saving and investing and give you a realisticpicture of what your future will look like givendifferent scenarios. Some planners will even help youestablish a budget, ensuring you spend less than youmake. Remember the 20-year-old who could have $1million by retirement by saving $4 a day? Think aboutthat before you order a large mocha with a doubleshotevery morning.

Katherine B. Paal, MBA, CFP ^®, CTFA, is a Certified FinancialPlanner^™practitioner at Heritage Financial Consultants inLutherville, Md, and is an investment advisor representative,registered representative, and licensed insurance broker withLincoln Financial Advisors, a registered investment advisor andbroker/dealer (1300 York Road, Lutherville, MD; 410-339-6675). She welcomesquestions or comments at kpaal@LNC.com. This information should not be construedas legal or tax advice. You may want to consult a tax advisor regarding thismaterial as it relates to your personal circumstances.