Are you on your way to retirement? How a financial plan can help you

Investing for retirement can be daunting, especially since it’s common for future retirees to worry about whether they’ll have enough money to see them through their golden years.

There are a few rules of thumb that are meant to help you figure out what stage you’re in when saving for retirement. One analysis found that by age 30, you’d need to save at least a year’s salary to be on track to retire by 67. And by age 40, you should have three times your annual salary saved.

Another strategy uses the 4% rule to help individuals calculate their retirement numbers – you would just multiply your annual expenses by 25 to find the “end goal” of how much money you need before you can retire with enough money to see you through 30 year.

But before you try to start crunching the numbers, there’s another important way to track the progress of your retirement savings — and it’s probably the first strategy you should turn to. Liz Sheehan, senior vice president of wealth management at UBS, recommends creating a financial plan when you start thinking about retirement.

“Unfortunately, there is no shortcut,” says Sheehan. “A comprehensive financial plan is the best way for someone to know if they are on the right track.”

A financial plan can give you a clear idea of ​​which areas you are already achieving your goals and which areas you need to focus more on. Part of creating a proper financial plan means being clear about what you have need do and wish to work while working until retirement. For example, if you know you want to travel the world in retirement, you’ll need a lot more money to cover those travel expenses than if your ideal retirement looks more like downsizing and moving to a low-cost area.

According to Sheehan, there are several questions to consider when coming up with clear retirement goals and plans:

  • How do you imagine your life and your family in 10 years? 20 years? 30 years?
  • If you didn’t have to work, how would you spend your time?
  • What would you like to achieve with your wealth?
  • Do you have any financial problems that you would like to solve through the financial planning process? (ie. Do you want to buy a house and/or how to pay for your child’s college)

Of course, planning for retirement is more than just figuring out how much money to invest each month. You’ll also want to think about other areas of potential change you may encounter in life.

“Financial planning goes beyond basic budgeting and evaluates topics such as insurance planning, liability management and estate planning,” says Sheehan. A financial plan should also include an asset allocation review, children’s education planning (including how to pay tuition), charitable planning and insurance analysis, she further explains.

Of course, you don’t have to try to answer all these questions and scenarios yourself. A financial planner can help you navigate the process no matter what stage of life you are at. You can also discuss what tools you could best use to achieve your goals. For example, robo-advisors such as Wealthfront and Betterment automatically adjust the allocation of your investment portfolio depending on your goals and risk tolerance, so this could be a solid recommendation for someone who wants an easier, yet tailored approach to retirement investing. .


  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle chosen. $500 minimum deposit for investment accounts

  • Fees

    Fees may vary depending on the chosen investment vehicle. No account, transfer, trading or commission fees (fund ratios may apply). Wealthfront’s annual advisory fee is 0.25% of your account balance

  • Bonus

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash. Additional asset classes in your portfolio include real estate, natural resources and dividends

  • Educational resources

    Offers free financial planning for college, retirement and home buying


  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle chosen. For example, Betterment does not require clients to maintain a minimum investment account balance, but there is a $10 ACH deposit minimum. Premium Investing requires a minimum balance of $100,000.

  • Fees

    Fees may vary depending on the chosen investment vehicle. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has an annual fee of 0.40%.

  • Bonus

    Up to $5,000 free for one year with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash

  • Educational resources

    Betterment offers retirement and other educational materials

Terms apply. It does not apply to crypto asset portfolios.

“Financial planning is a process, it’s not something that’s done once in isolation and never reviewed,” explains Sheehan. “I suggest that clients review their financial plan once a year, or during each life change.”


A financial plan is one of the most important strategies you can use to determine if you are on track with your retirement goals, as the plan includes both the qualitative and quantitative aspects of your goals. If you don’t know how to start creating a financial plan or what should go into your financial plan, an advisor or financial planner will be able to help.

Editorial Note: The opinions, analyses, reviews or recommendations expressed in this article are those of Select editorial only and have not been reviewed, endorsed or otherwise endorsed by any third party.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button