Comprehensive Financial Planning

Financial planning is an essential part of creating the life you want. Since failing to plan for the many inevitable financial challenges and problems that arise while living your day-to-day life is planning to fail.

To successfully face an uncertain financial realities and an uncertain retirement landscape requires careful planning. Unfortunately, far from planning with care, many Americans fail to make any plans at all — perhaps due to the complexity of calculating the money needed, the confusing array of information and resources, because they incorrectly anticipate that they will continue to work indefinitely, or simply due to fear.

A comprehensive financial plan must be customized to your long- and short-term life and financial goals. Financial planning is an essential part of creating the life you want today and in the future, protecting those you love and reaching your personal goals.

Today you might be concerned with:

Protecting your family from unforeseen issues arising from illness or disability
Funding a child’s education
Leaving a legacy for your family, a charitable cause or organization that is meaningful to you
Ensuring a stress-free and financially free retirement

Whether you’re focused on financial goals or need detailed wealth planning, a comprehensive financial plan should reflect your retirement savings and investing plan, specific needs like children’s education, as well as protection for your family in the event of death, disability or critical illness.

Why is a financial plan important?

You may have financial goals, but having a plan in place can help you prepare for life’s surprises and face them with confidence. A financial plan doesn’t need to be complicated. It simply needs to cover everything that’s important to you at this specific stage of your life, while balancing your risk tolerance with your time horizon.

Your financial plan serves as a guide allowing you to make necessary adjustments along the way.

Start your financial plan

A financial plan begins with an inventory of your finances, and determining your net worth and cash flow. You must first know where you are financially before creating a plan to guide you to your destination. Consider all of your assets (including property), your income and your expenses—both now and in the long term.

Next, define in writing and prioritize your financial goals. Are you concerned about saving and investing enough for retirement? Funding a child’s or grandchild’s education? Leaving a legacy—either for your family or a charitable organization? Saving for potential healthcare expenses and long-term care? Knowing your goals will help drive your plan.

You may also want to think about tax planning, estate planning and life insurance, and you may explore how a trust or an annuity could factor into your plan.

It’s vitally important to get started:

Begin saving now. The more you save, the better prepared you’ll be for life’s inevitable emergencies, retirement or other life goals.
Set a budget and live within your means. But as your salary increases, so should your savings and investing.
Contribute as much as you can to your employer’s 401k or other retirement programs.

Everyone has competing financial priorities and expenses, but making a budget may help you manage your expenses and find extra money to save and invest for your goals. Start with your income, essential expenses, and then add discretionary expenses.

Think about what would happen if you made no changes to your plan or your rate of savings. Is there a gap between where you are now financially and where you want to be? If so, you may need to reprioritize your budget to accommodate for more saving, or re-evaluate your goals.

Helping to protect the ones you love is the ultimate way to show you care.

Planning for retirement begins with your vision for the future. Thus, it’s important to picture the life you want to live when you retire. Think about how old you’ll be, what you plan to do and how you’ll live.

Ask yourself:

Do you plan to retire from full-time employment as soon as possible, or wait until you’re fully eligible for Social Security?
What’s it going to take to maintain the lifestyle you want in retirement?
Do you plan to travel more—whether that means dream vacations or extended visits to friends or family out of state?
What if your health takes a turn, since medical expenses increase as we age?

Anticipating whether you’ll have 20, 30 or 40 years of retirement will help you determine how much to save. It’s important to assess what you’ve saved, the rate at which you’re currently saving, and how much more you need to meet your goals.

Retirement savings options

For many of us, there are two primary retirement savings vehicles: Employer-provided plans and self-directed savings. Employer-provided plans often allow pretax savings for retirement, as do self-directed IRAs. Based on your goals, and the limitations of those types of plans, you may want to explore additional options.

Retirement saving is a long-term proposition. With the right diversification approach, you may be able to help protect your savings against market shifts while balancing risk to help your savings grow. Periodic reviews can help you see if you’re on track to achieve your goals.

Staying the course with saving

Life is full of surprises that will impact your financial situation—from welcoming a new baby, to saving for a child’s education, to losing a job or facing an unexpected illness. These life events can all create disruptions in your savings that force you to reevaluate your plan, your goals and expenses.

Keep focused on the amount you want to save for retirement, and try not to be distracted by potential purchases that you may see as financial opportunities. Buying a new car that’s on sale now may seem like a good idea, but it could mean you’re compromising your goals – causing you to wait longer and save less.

Conduct an annual review of your comprehensive financial plan to monitor situations that may impact your retirement savings, such as market risk and taxes. You’ll also need to be attuned to inflation, healthcare costs and longevity, which can impact your post-retirement income.

Work with a financial advisor, if necessary. Competing priorities can be challenging. A financial advisor can provide an objective voice that can help you stay focused on your goals, while providing insight that may help you determine if you’ll want to fine-tune your plan.

And as your circumstances change, your financial advisor can help you assess your plan and financial situation, allowing you to confidently take charge of your financial future.

Life never stands still and as a result, planning is vitally important. In your comprehensive financial planning, you must try to strike the right balance between achieving your financial goals today, with an eye out for living the stress-free and financially free retirement you always envisioned.

References:

Investors are advised to consider the investment objectives, risks, and charges and expenses of any asset carefully before investing.

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