Making Connections: A Reality Check for Your Future

Can you envision your future? Maybe in the short term, but when it comes to creating a picture of your life 20 or 30 years from now, the task becomes more challenging. That’s why a majority of people fail to achieve their long-term financial goals.

A recent study by the Federal Reserve Board, "Economic Well-Being of U.S. Households," revealed that only 11 percent of respondents who are not retired have dedicated "a lot" of thought to financial planning for their retirement. The study also found that although a little more than half of the respondents were saving some portion of their income, close to 1/5 were spending more than they earned.

Doug Loftus and Tom Curti, founders of Wealth Dimension Group, have found that many new clients struggle to describe in detail what they want in retirement, which leads to less than optimal decisions now and missed opportunities for the long term. This Symmes Township-based certified financial planning firm works with clients to build personal financial plans that define and integrate individual, professional and family goals with available financial resources to establish a clear financial strategy.

"When you start asking clients questions about retirement specifics, couples often grapple with defining their desired lifestyle," says Loftus. "Our mission is to help clients create a real connection to their future, clarifying their vision and mapping out a detailed plan

to achieve it. Many times clients underestimate what it will take to live comfortably. By creating this well-defined blueprint, our clients understand how their actions today will positively impact their outcome further down the road."

THE TRADE-OFF: NOW VS. LATER

Why do people struggle to plan for their future? Researchers at Stanford University explored the inability to prepare and save for retirement. One factor is temporal discounting, which is when people place higher value on rewards in the present than those in the distant future. They struggle to connect the benefits of saving now with the positive outcomes that they will receive at a much later time.

Another factor that researchers considered is that people have trouble relating to their future self. Researchers proposed that people who could link themselves to their future image would change their current behavior. They performed experiments to determine if a glimpse into an older version of yourself would impact how you save for retirement. Using a virtual reality simulator to create an age-progressed image of participants, they created an environment for them to interact with their future selves. The results indicated that when participants viewed the aged image, they considered allocating significantly more money to a retirement account within the study. 

By identifying with their future selves, they showed an increased propensity to delay immediate monetary rewards to benefit themselves in the future.

How can people overcome these obstacles and connect to their future?

BUILDING A REALISTIC PICTURE OF RETIREMENT

One of the keys to engaging with your future may lie in the details. According to Curti, " We guide clients through an in-depth assessment as part of our planning process that not only includes their financials, but actually starts with clarifying their vision of the future. It compels

clients to create a clear, detailed picture that identifies the where, when and how of their retirement lifestyle."

Wealth Dimensions’ process incorporates evaluating various scenarios and discussing alternatives to ensure that an effective and flexible plan results. This plan becomes the framework, helping clients make smarter decisions that fully optimize opportunities and enable them to reach their long-term vision.

Their success comes from client feedback. Wealth Dimensions has found that this process provides clients with a link to their future and puts them in control of how to get there. "Clients are often surprised at their new level of insight into how their current decisions will impact their lifestyle choices in the future," Loftus says. "Our biggest reward is seeing the long-term plans we helped clients build become reality due to their commitment and an ability to envision the larger picture. Often clients are surprised at the opportunities they were missing before having the plan in place."

What steps can you take to build a better future? Wealth Dimensions recommends starting with the following strategies:

DEVELOP SPECIFIC LONG-TERM GOALS. Develop specific long-term goals. The details are important to determine what you need to save to achieve your goals. Answer questions about your future as though it is happening within the next year. Where will I live? What will I be doing?

DO RESEARCH TO CONFIRM DETAILS. Do research to confirm details. Once you determine what you want, it’s time to look into options, costs and choices. Research is good preparation that can help link you to this future reality.

LINK YOUR GOALS TO A WRITTEN FINANCIAL PLAN. Link your goals to a written financial plan. Run the numbers to ensure your goals are attainable, and you are able to reach them within your time frame.

COMMIT TO MAKING CHOICES THAT ALIGN WITH YOUR PLAN. Your actions and decisions now will influence your future lifestyle. Carefully select options that will pay off in 20 years when you are ready to realize your goals. 

To learn more about their approach to the financial planning process, visit the Resource Center on the Wealth Dimensions Group website at www.wealthdimensions.com/resource-center.

Wealth Dimensions is located at 7870 East Kemper Road, Suite 330, Cincinnati, OH 45249. You can reach them at 513.554.6000 or visit their website at www.wealthdimensions.com.