How SMART are your financial plans?

It is not unusual to discuss early retirement when the prospect of working or travelling in bad weather is compared to leisure time in the sun. However, my follow-up questions with clients about what is achievable, and when, sometimes highlights gaps between what is possible and what is probable.

Glorious vague objectives abound, but they should be specific (you will notice that this is the first letter in SMART). I want to retire before I am 60 is more specific than to ‘retire early’ but less specific than retiring on my 59^th birthday.

Can you measure what success looks like? A brief sentence stating whether success is financial independence, reliance on savings and investments, and how many holidays per year would be a benchmark.

Is the goal achievable? It is all very well aiming to have an income matching your salary, but if your pensions are unlikely to generate more than 50% – is your lifestyle achievable?

Is it realistic to expect investments to grow at 10% per year above the rate of inflation? Will you inherit anything, or will you need to rely on a lottery win? On the other hand, if your pension benefits and the drawdown on existing investments are likely to be close to your current expenditure – it could indeed be achievable.

When is all this going to happen? If there are two people involved, will everything happen together? Will you need to plough more into getting the financial security you desire for many more years? How often will you review progress? So, your objective needs to be time related.

These principles are used in the world of business, they make complex situations easier to manage, and it focusses the mind on what is most important, if you can describe your objectives in SMART bite-sized pieces, success is just around the corner.

Eamonn Dorling Dip PFS

Senior Independent Financial Adviser

Brooks Wealth Management