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Got goals? Do the math
Your money
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If you breathed a sigh of relief when you put away that algebra or geometry textbook for the last time, you might not be eager to take up the subject of math again. However, by doing some number crunching, you can put a “price tag” on your long-term financial goals, and that’s the first step toward achieving them.
To quantify the costs of your objectives, you must be specific about what you’re trying to accomplish. Do you want to retire as soon as you possibly can and then spend your time traveling the world? Or are you planning to work until 65 and then open your own small business? Obviously, these are vastly different goals with vastly different costs to you.
Once you know what you really want to do when you retire, you should be able to project your annual yearly expenses. Then, you can ask yourself these questions:
How many years will I spend in retirement? None of us can predict exactly how long we will live. But if you consider your overall health, your lifestyle habits and your family’s history of longevity, you can come up with a reasonable estimate of how many years you might have to pay for in retirement.
Where will my income come from? To pay for your retirement goals, you’ll likely need to draw on all types of income available to you, including Social Security and your investments, such as your IRA, 401(K) and whatever individual stocks and other securities you may own. To help reach the level of income you’ll require, you will need to monitor all these investments over the years, and make changes as needed.

Calculating costs of goals
Achieving the “ideal” retirement might be your biggest financial goal, but it’s almost certainly not the only one. But no matter what goals you have, you’ll still need to “do the math” necessary to calculate costs and arrive at solutions.
So, for example, if you’d like to help pay for college for your children (or grandchildren), you’ll need to look at what college costs today, how much it’s likely to cost in the future and how much money you can devote to paying those costs.
To illustrate: For the 2006-07 school year, it costs, on average, $16,357 for students attending four-year public colleges and universities, according to the College Board. If college costs were to rise five percent every year, today’s newborns can expect to pay about $162,000 for four years at a public school.
With the presence of scholarships, loans and work-study arrangements, you might not have to foot the entire $162,000 bill. But at least you’ll know what you might need and you can start planning the appropriate savings and investment strategies.
And you can take this same approach to other long-term goals, such as buying a second home or a new business. Keep in mind, though, that “doing the math” can involve a lot of variables, so you may well want to consult with a financial advisor, someone with the tools and experience to help you chart your course toward your goals.
But don’t wait too long. The sooner you start planning, the more pleasant “the math” will be for you.

Cardella is a financial planner with Edward Jones in Hinesville.
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