When you’re traveling, you usually can’t get to your destination without a road map or GPS. Planning for your future financial and retirement needs often looks very similar. Just like it’s important to have a roadmap to find all the right routes to your destination on a trip, a customized financial plan can help ensure you’re on the right path for retirement, too. By creating a financial plan, you can ensure that you’re taking advantages of all the right avenues to protect yourself from liability, risk and other items that might not be front of mind. So, what’s the process look like?
Comprehensive Financial Planning consists of listing everything you can imagine in your financial life: Income, Expenses, assets, liabilities, future costs, unexpected emergencies, insurance, estate planning, investments, taxes, and even more. While it’s common to focus on a dollar amount that is needed for retirement, many people fail to focus on their budget and what they want or need to spend in retirement. It’s easy to say something like, “I will need $2 million dollars in assets, and I can live off that throughout retirement.” But, it’s harder to list out your budget and add in future costs that you may not be considering in the present moment. You may find that an amount like $2 million is too much, or maybe it’s not even close to enough!
Another step in the Financial Planning process is assessing your risk tolerance and the type of asset allocation you may need to consider. Risk levels are difficult to determine with just a questionnaire, so a customized Financial Plan helps you determine the right rate of return that helps you achieve your goals.
My role as a LPL Financial Advisor is to you create, implement, and monitor a Financial Plan long term. After building the initial plan, I can always help you with your investments and long-term goals as well. When we work together to make the plan, we’ll sort through many pieces of information including your income, tax returns, your will, your budget, all expenses, and all assets including 401(k), IRAs and cash. Now that you understand the formula for making a plan, are you ready to get started? Building this financial roadmap early will help you prepare for the future.