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What is a Financial Plan?

| March 21, 2023

You hear the phrase “financial plan” used in commercials, but do they ever really tell you what a financial plan is? I could spend hours explaining what a financial plan is, but I’ll summarize it in 4 words. 1) Retirement 2) Education 3) Survivorship 4) Tax

First step is to determine your financial and personal goals. Examples are retirement age, retirement income, traveling, vacation home, and spending time with family and friends. These goals help us determine how much money you need on a net after-tax basis in retirement. Everyone has different goals and we adjust the plan if your goals change. You can’t buy time, but a financial plan can help you use your time efficiently.

If you’re in your 30’s, 40’s, and 50’s we determine what you need to save to pursue your goals. This involves your risk tolerance, saving strategies, and investment choices. Knowing your risk tolerance will help you avoid making financial mistakes when markets get volatile. Implementing savings strategies can help manage your retirement nest egg, and the investments you choose play a big role in determining your performance.

As you retire, usually in your 60’s or 70’s, we help you transition from the accumulation phase to the retirement cash flow phase. We determine an efficient means to distribute income. A successful retirement plan should mitigate tax. The plan should be able to adjust to tax law changes and the changing economic environment. Our goal is to help you confidently enter retirement and enjoy life during retirement. 

Education should be addressed in every plan. Will your kids attend college and for how long? In state or out of state? Public or private college? Do you plan to fully fund college expenses? All these questions should be discussed early in the planning process.

Survivorship is very important. Will your spouse be left with sustainable income? Will the assets you accumulated transition to your spouse on a tax efficient basis? Will your family be able to maintain its current lifestyle? If both spouses die unexpectedly, what is the ultimate distribution to your children? Do you have protection and controls in place to help your children manage an unexpected inheritance? Survivorship isn’t fun to talk about, but it’s very important to plan for if you ultimately want what’s best for your family.

Tax plays a role in everything financial. Active tax planning should be performed during the accumulation and retirement phase. Mitigating tax may increase your overall return. If you’re not tax planning, you’re not going to reach your full potential.

As I mentioned earlier, you can’t buy time, but you can plan to use it efficiently. Proactively planning for retirement can potentially lead to a successful retirement. Don’t put itt off because the future reward is much greater than the effort you put into planning. If you have any questions please call or email me.  


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.