How To Make A Financial Plan For Retirement

How to Make a Financial Plan For Retirement

Updated on Dec 06 2019


When it comes to developing a financial plan, it is never too early to start getting organized. Preparing for retirement does not have to be complex. It can be quite simple and it all starts with creating a financial plan considers your unique financial situation. Learn more about the importance of having a financial plan and how you can create your own to have a financially successful future.

Why You Need a Financial Plan

To be ready for the retirement that you want, you need a financial plan. While no one can predict life’s unexpected twists and turns, a financial plan can give you an advantage in controlling your financial future, no matter what the future brings. Financial planning can help you achieve financial goals, hold you accountable to those goals, and help you prepare for life’s big events.

The definition of a financial plan is a “comprehensive statement of an individual’s objectives for security and well-being and a detailed savings and investing strategy for achieving those goals.” Different from retirement planning, financial planning has a wider scope of focus. Financial planning is more comprehensive and holistic, including short-term and long-term goals. Taking the time to go through a financial plan now can help you navigate unexpected healthcare costs, your child’s education, weddings, graduations, and your retirement.

These 5 steps can help you get your financial plan started, ultimately launching your journey to a successful retirement and more.

5 Steps to Creating Your Financial Plan

1. Set your goals.

To start your financial plan, take the time to think through both your long-term financial goals and your short-term financial goals. Maybe you have a large expense coming up. Maybe your daughter is getting married and you want to help pay for the wedding. Maybe a child is going to college and you want to send them off with a starter fund. Whatever it is, take all of it into consideration. Now is the time to dream big. What do you want your retirement to look like? Will you travel? Will you continue working?

Write these goals down and use them to shape your financial plan.

2. Conduct a thorough financial assessment.

You can not get where you are going if you do not know where you are. This part can be painful for some, but now is the time to take an honest look at your finances. What kind of debt do you have? How do you plan to pay it off? Are you contributing to a 401(k) or IRA? Take the time to create an honest financial assessment so you can clearly see the gap between where you are and where you want to be.

3. Estimate your cash flow in retirement.

This may feel like a wild guess, but it’s best to start somewhere. What do you think you will spend in retirement? Include healthcare costs, like medical insurance and long-term care. Do you want a travel fund in retirement? What will your housing look like? After you have estimated your expenses, consider your sources of income. Do you have a reliable pension? What will your estimated investment accounts pay out each month? Will you have any additional sources of income in retirement?

4. Consider taxes and inflation rates.

When creating a financial plan, it is important to know which accounts you will need to pay taxes on and which have already been taxed. It’s also important to remember that you will need to consider inflation, knowing that $1 million today may not go as far in 20 to 30 years.

5. Contact a financial advisor.

The best way to prepare for your financial future and meet short term financial goals and long-term financial goals is to meet with a financial advisor. A financial advisor can help you pinpoint blind spots in your retirement strategy and can suggest a sound investment strategy to help you avoid common retirement pitfalls.

As with most things, two heads are better than one when it comes to your financial future. Find a trusted fiduciary financial advisor who can help you create and navigate your financial plan, helping you design the retirement you have been working for.

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