Having a plan is generally a smart idea. If you’re going on a road trip, for example, you plan by figuring out a route, deciding where you’ll stay, making sure you’re prepared for emergencies and more.
Your finances are similar to this road trip. Planning for the journey ahead can help make it a smooth ride, and if or when the unexpected happens, your plan should help you know how to respond. However, getting started with a financial plan can seem daunting, so let’s take a closer look at how to build a plan that sets you up for success.
Start with help by your side
Meeting with a financial advisor is a great way to get your plan underway. Financial advisors have experience with a number of personal financial situations, and this experience allows them to make sound recommendations to you. A good advisor will take the time to get to know you and understand your goals, then develop a personalized plan that will help you reach these goals.
This often includes brokerage services, where the advisor will work with you to build a portfolio of stocks, bonds, mutual funds and annuities that make sense for your situation. A financial advisor can also help you with:
Education planning: If you have children, it’s critical to set money aside for their future college expenses.
Insurance planning: Your advisor can discuss life and long-term care insurance options with you and build them into your plan.
Tax planning: In conjunction with a tax advisor, a financial advisor can analyze your portfolio to make sure you’re not over or underpaying on your taxes.
Retirement and longevity planning: This is the ultimate destination on the journey, and you’ll want to make sure you can live comfortably when you’re no longer working.
Make adjustments during the journey
Road trips can be winding with unexpected detours along the way. Your financial journey can also take twists and turns, which is why it’s important to have regular check-ins with your advisor.
These meetings are a great time to take a look at your progress, evaluate your changing goals and make adjustments. Maybe you want to tweak your investment strategy, look at some different types of insurance or get more focused on retirement. Your financial advisor can help provide guidance and insight.
Get ready for retirement at the end of the road
Think of retirement like the nice vacation resort at the end of the road trip. Once you arrive at the resort, you’ll likely be filled with excitement. But as your stay grows longer, you’ll need to rely on your plan to ensure you continue to enjoy the visit. Did you adequately budget for meals and entertainment? Is someone checking on your house? Are kids or pets taken care of? Not having a plan for any of these items can quickly turn a relaxing vacation into a stressful ordeal.
Retirement also has a “honeymoon” phase at the beginning that gives way to the realities of day-to-day life. While you definitely should celebrate being retired, you also need to have a plan in place to make sure your life remains comfortable without a regular paycheck.
Balancing your financial reality with the lifestyle you want to create takes some finesse. But it’s worth the effort so you can create an income stream designed to cover your basic needs and wants when you’re no longer working full time. Working with a financial advisor to first create a financial plan while you’re younger, then adjusting that plan as you get closer to retirement, is a great way to reach that destination.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Cory Miner and not necessarily those of Raymond James.