What Is Your Family Vision?

Okay, I am somewhat of a geek. One of my favorite channels is HGTV. I am fascinated by how they can turn a home that looks like something out of a horror movie into a dream home.

What fascinates me more though are the couples that go on the shows looking for a home. My favorites are the ones with unbelievably unrealistic expectations who are completely on different pages. One episode had a couple looking for a 3 bedroom, 2 bath home for under $250K in L.A. (median price of a home is about $534,900 in LA). The husband wanted a condo and the wife wanted a single family home.

When I watch these shows I view them as a metaphor for what I experience in the financial planning world. I see couples on completely different pages when planning their finances, especially in retirement. I have gotten used to a husband or wife announcing for the first time, in my presence, to their spouse of their intent to retire in a year. Completely blindsided, the other spouse looks at them in shock.

I asked a recently retired couple about it. The laughed and said that they were the same way years ago. I asked what changed. They said they worked as a family to get on the same page by doing the following:

  • They brainstormed all of the things they saw in their future in 20 years. They wrote down everything they wanted on sticky notes and posted it on a bulletin board. They even cut out pictures that represented their goals and posted the pictures on the bulletin board. The wife wanted a bigger home and to retire in 15 years. The husband also wanted to retire in 15 years and a boat. Their child wanted a puppy and endless trips to Disney.
  • Next they started to prioritize their wants. Retirement was #1 for both of them. A larger home was #2. The boat was #3 and an occasional trip to Disney was number #4. The dog did not make it to the list.
  • Afterwards, they started crunching numbers. They did a retirement budget to estimate their expenses in retirement. They calculated the possible new mortgage payment to include the additional costs like new appliances and higher utility bills and included the new mortgage in their budget since their new home would not be paid off by their desired retirement date.
  • Then they did a retirement calculation to estimate how much of their income they can replace in retirement. The calculator showed that they could replace 80% of their income. They realized they could retire on this amount only if they kept their home instead of upgrading to a larger home.
  • Their existing mortgage also allowed them to continue to save for their child’s education and to take the occasional trip to Disney.
  • Neither saw taking care of a dog on their goal list.

They said getting on the same page allowed them to retire without making financial decisions that would have unintentionally derailed their goals. I asked them about their child. They then pulled out a picture of their daughter with a grin the size of the San Francisco Bridge cuddling with her Labrador Retriever.

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