This looks pretty interesting although I haven't read through it all yet. I like that it focuses not only on goals but also on risks - market, health, longevity/mortality, event, and tax/policy risks specifically. Although it is aimed at those not yet retired I firmly believe in revisiting one's plans regularly to make sure you are on target.
Vanguard
I just read the introductory section on goals and really like the order in which they listed them:
- Basic living expenses (as in you need a budget folks!)
- Contingency reserve (those unplanned but expected events such as large healthcare or custodial care expenses, car or home repairs, etc.) - If you are still working this would include job loss and short term disability situations as well. I would add natural disasters if you live in an earthquake prone area like I do, etc.
- Discretionary spending (surprise! they list dining out in this category although I put it in our budget as I do vacations however a major trip I would consider discretionary as are large gifts)
- Legacy (leaving $ to heirs or charities)
Of course you might prioritize leaving a financial legacy over discretionary spending but you can't argue with basic living expenses and a contingency reserve as top priorities.
If you read this let me know what you think please!I'm going to work through it and will post about it.
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your vanguard link doesn't work
ReplyDeleteThanks for letting me know. I believe it is fixed now.
ReplyDeleteI think you may be looking at the Basic and Discretionary spend categories a bit differently than I do. Basic items are those we have to take care of - Groceries, Utilities, Taxes, etc., in order to simply get by. Discretionary is everything else that makes life a bit more pleasant - Dining Out, Travel, Entertainment, Hobbies, etc.
ReplyDeleteI think the point is to understand what your Basic Expenses are for day to day existence, in the event that a financial disaster occurs, and Discretionary needs to be cut back or eliminated.
We take comfort in our Basic Expenses being relatively modest, irrespective of our far less modest Discretionary Spend. And our Discretionary Spend is definitely part of our overall budget. It is simply marked as the fat we would trim should there ever be need.