4 Ways to Define Your Long-Term Financial Goals

Financial planning is about supporting the life you want to live. A comfortable retirement may be your ultimate goal, but what does that look like for you? And just as important, how do you plan to get there?

The first step in any strong action plan is understanding your starting point. The second is identifying your goals. Everyone is working toward something. What are you working toward? What steps are you taking to stay on track? And what milestones can help you measure whether your plan is working?

Goal setting is one of the most important parts of building a long-term financial plan because it gives you a way to measure progress over time. In the second part of our three-part series on building a solid action plan, we’ll share four tips for defining long-term financial goals.

With all that in mind, let’s get started.

1. Smart Financial Goals Are About Lifestyle—Not Money

When you begin setting goals, it’s easy to focus on dollars and cents. You may think you’ll be set once you save a certain amount of money. But what do you actually want that money to help you do?

Unless your dream is to dive into a pool of gold coins, your goals should be about more than simply accumulating wealth. Instead, start by envisioning the lifestyle you want to live. What does your ideal retirement look like? Does it include travel? If so, are you picturing lavish vacations or modest getaways? Do you want to spend more time at home? If so, will you revisit old hobbies or explore new ones that may come with added costs? Do you hope to spend more time with family? If so, do you live near your children or grandchildren, or might you purchase or rent a second home in another state?

The way you picture your future can help shape how much you may need to save. After all, there’s a big difference in expected expenses between a retirement filled with world travel and one centered closer to home.

2. Include Your Core Values

Everyone has different values, and those values should help shape the lifestyle you want to live. That lifestyle should remain central as you build a plan to pursue your long-term financial goals.

If family is one of your top priorities, you may not feel fulfilled spending long stretches away from children or grandchildren. On the other hand, if you value adventure, a routine centered mostly around home and the occasional round of golf may not feel especially rewarding.

The goals that matter most are the ones that reflect what matters most to you. When your goals are grounded in your core values, it can be easier to stay committed to them over time.

3. Ensure You and Your Spouse/Partner Are Aligned

While establishing financial goals may begin as an individual exercise, at some point you’ll want to bring your spouse or partner into the conversation. You share a life, so it’s important to be aligned on your long-term financial goals.

Even so, shared goals do not always come automatically. You are still two different people, with potentially different values and different ideas about how you want to spend your retirement years. And because your resources are finite, you may need to prioritize the goals that matter most to both of you. That can sometimes mean finding thoughtful compromises.

For example, you may value family and community, while your spouse values adventure and freedom. Those priorities do not have to conflict. Maybe instead of spending a month traveling through Europe on your own, you go for a couple of weeks and bring your kids and grandkids along. Or maybe you invite friends who also enjoy traveling. Solutions like these can help reflect what matters to both of you, but they require open communication.

4. Determine How Much It’ll Take to Live the Life You Want

Once you have a clearer picture of how you want to live, you can begin estimating what it may cost. At that point, the process becomes more of a budgeting exercise. If you and your spouse plan to split time between your primary home and a condo in a beachside town, for example, you’ll want a realistic idea of what that lifestyle could require. What are the monthly utility costs? Are you paying a mortgage? What about airfare or other travel expenses? And how much do you want to set aside for everyday enjoyment?

Once you estimate those expenses, consider how long you expect to maintain that lifestyle. If you retire at 65 and expect to spend the next 15 years traveling actively or enjoying a second home, be sure that time frame is part of your planning.

It’s also important to plan beyond your ideal scenario. Contingency planning can help you prepare for the unexpected, whether that means emergencies, rising costs, or simply staying active and healthy longer than anticipated. Building in flexibility can help your plan support you over time.

Goal-Based Retirement Planning Solutions

Ultimately, setting goals is about identifying where you want to be in the next 10, 15, or 20 years. It reflects the life you’ve worked hard to build and the future you want to create, so your plan should be shaped around what matters most to you.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group®.

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