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This is a guest post by Douglas Goldstein, CFP ®. Read more about Douglas at the end of the post.
Some people are planners and some aren’t.
Which are you?
Chess players are counted among the world’s greatest planners as they not only have to think many moves ahead, but have to come up with alternative plans if their opponent doesn’t move as anticipated.
This advance planning is similar to the strategic thinking needed in order to stay ahead when the financial markets don’t behave the way you hope they would.
Even if you’re not a chess player, chess can teach valuable financial lessons and help you become the grandmaster of your money…
In chess, the main objective is to put your opponent’s king in checkmate. At the same time that you act offensively, though, you must defend your own king to make sure he’s not checkmated.
To win, you must be both steadfast in your original strategy as well as flexible enough to change methods when your opponent surprises you.
How Chess is Like Retirement Planning
When it comes to your finances, your objective is to save enough money for a comfortable retirement.
As life doesn’t always go as planned, you should remain committed to your savings plan, but make sure your overall financial plan is flexible enough to meet the changing circumstances.
As with the beginning of a chess game, your savings should begin aggressive and then become more conservative as you approach the end game: retirement.
The most important step to retirement planning is building an emergency fund.
Having three to six months of liquid assets that you can tap in case of an emergency can prevent you from going into debt, or having to dig into retirement funds in order to meet unexpected expenses.
You Need Insurance
The second most important step to retirement planning is insurance.
Make sure you protect yourself and your family with adequate disability and life insurance policies which can head off any potential disasters that could derail your retirement.
By applying careful planning, strategy and flexibility, you can hopefully become the grandmaster of your finances and retire as rich as a king.