No matter how well you plan your financial future, life can throw up some challenges and alterations that could lead you to consider making changes. For example you might assume you are retiring at the normal age of 67. However you might fall ill and be forced to retire earlier. Conversely you might end up working for yourself and be able to sell your business to retire at 50. Some people manage to do it, even if they are few and far between.
The point is you could find you plan for one thing when in actual fact something completely different happens between now and then. This doesn’t have to be something bad – it just means you might need to adjust your investment plans at one or more points in your life.
Recognising when your needs might change
This is the first step in the process. Most of the time you’ll recognise a change in circumstances. For example maybe you’ve saved for the last 15 years thinking your kid will go to college and actually they land a great job right out of school and never go. Another example could be you’ve saved for a few years with the intention of going on a world cruise when you retire. However when you get to retirement age you find you’d rather explore closer to home instead. There are all kinds of other examples you could give in this situation.
As you can see, not all situations might demand a change in the way you invest. If you’ve built up a nice block of savings that was intended for your kid’s college fund, maybe you can save it for their wedding instead. In a more general sense you may have been saving for your retirement and you had specific plans for when that time came. Now though your plans have changed. However it doesn’t mean your savings or investments have to change. You can still use that cash to fund a different kind of retirement. You might even elect to use some of it to help you set up your own business.
Knowing what changes to make financially
Clearly there are situations in which you may not need to make any changes at all to the way you’ve been saving. However if those changes are big – as in you’ve gotten divorced for example – you will clearly need to prepare for some significant changes in your life. As such you’ll need to think about how your finances will change and how big those changes might be.
In a post we issued a couple of weeks back we mentioned the idea of seeing a financial advisor. If you find your investment plans need to change in some way – whether this is a positive or negative change – you should consider whether seeing an advisor could help you get the results you want. You may find you can make better decisions when you have the advantage of more knowledge to go on.