When it comes to setting goals, especially your financial goals, consider this insight: “Setting goals is the first step in turning the invisible into the visible.”
It comes courtesy of Tony Robbins, the celebrated self-help author and motivational speaker, and makes two important points.
Set and Visualize Your Financial Goals
The first point is the process of setting your goals. Clear and realistic financial goals will serve as the starting point of your financial future. These goals will help define where you want to be and what you want to achieve. As they say, if you don’t know where you are going, you’ll never get there.
The second is about visualizing your goals and turning the invisible into the visible. Many professional athletes use visualization to help them ply their trade. For them, visualization shows them what success will look like. You should do the same with your financial goals.
For many of us, however, even if we have set our financial goals already – which is no easy task – we often stop there. We don’t take the next step and visualize – ‘quantify’ since we’re talking about money – in our minds what financial success could look like.
To help you address both of these important points, MassMutual has created a simple online tool to help you not only set your financial goals but visualize potential outcomes.
Our online tool uses the concept of ‘5-10-15-20’ as a guideline to help you set four challenging, yet attainable, financial goals. These short-term and long-term goals are based on what people like you have told us are their primary financial concerns: Income, Savings, Retirement and Debt.1
Short-term financial goals
Goal #1: Increase your annual income by at least 5 percent each year
Goal #2: Save at least 10 percent of your net annual income each year
Long-term financial goals
Goal #3: Target a retirement nest egg of about 15 times your annual income
Goal #4: Plan to have your debt (excluding your mortgage) paid down within 20 years
The financial goals you set today will most certainly not be the financial goals you have in the future. As your life changes and your family dynamics ebb and flow, your future financial goals will change as well. But the key is simply to get started. In the words of Mark Twain, another celebrated ‘self-help author’: “The secret to getting ahead is getting started.” 5-10-15-20 can help you do just that.
Have a Financial Goal ‘Look-See’
Once you’ve set your financial goals, you’ll need to see if they are really right for you. That’s where visualization comes in. By visualizing your goals out into the future, you can have a ‘look-see’ at where they might take you.
Our 5-10-15-20 online tool takes basic financial information about yourself and uses it to consider what your financial future may look like.
Income: The tool shows your potential cumulative income between now and age 67, assuming both a 2 percent and 5 percent annual increase. When you know how much income you might generate over the remainder of your working years, you can begin to not only plan for today (what other sources of income are available?), but tomorrow as well (is part of your future income at risk?).
Savings: If you saved 10 percent of your current net income each year, how much will you have in the bank at age 67? Where will you get the money to save each month; how much from your income and how much from eliminated expenses? Our tool helps you visualize both and lay the ground work for your monthly household budget.
Retirement: How much of your retirement nest-egg will be accounted for by your retirement account balances? Will the retirement contributions that you and your employer make each pay period be enough when compared to your financial goal? Our tool can help you see if any adjustments may be needed to reach your financial goal.
Debt: Managing debt is a careful balancing act between your income, your savings and your retirement. Our tool shows you how long it may take you to pay off your current debt (excluding your mortgage). You can use this information to create a debt management plan with an eye towards being debt free before retirement while not interfering with your other financial goals.
Get Going on Your Financial Plan
Once you use the 5-10-15-20 tool to calculate your goals and visualize your future, talk to a MassMutual financial professional. They can help you develop a road map to reach each goal, identify any gaps in your plans, and make recommendations on the steps you can take – including establishing other, different goals – to help you get there.
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1MassMutual, “State of the American Family,” January 2013.
The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.