What Should a Financial Plan Include?

You may need a guide—but how do you know who to choose?

Hit a spring pothole and you can lose a tire. But hit a pothole with your financial plan, and you may be in for a bigger problem than replacing a tire.

MP900398819Do you have an up-to-date roadmap to your retirement? Keeping your finances, investments and retirement plan on a smooth road has become more and more challenging. Every day seems to bring a new regulation, investment product, or app that claims to offer the best route. You may need a guide—but how do you know who to choose?

Kiplinger’srecent article, “5 Bases You Need Covered With Your Retirement Plan,”says there are plenty of financial professionals today who can get you started down the right path with investment advice. However, a professional who limits his or her professional life solely to investing advice, isn’t going to get you comfortably and confidently to your retirement goals. Be sure you have someone who will concentrate on these five key areas of your financial life:

Income Planning.Your retirement could last for decades. You must be certain that you’ll have reliable income streams to pay your monthly expenses. This area typically should cover things like Social Security maximization, income and expense analysis, inflation, a plan for the surviving spouse, longevity protection and investment planning. Once your income plan has been created, you need to analyze your remaining assets (those that you won’t have to draw from every month). This should cover your risk tolerance, adjusting your portfolio to reduce fees, volatility control, ways to reduce risk while still working toward your goals and comprehensive institutional money management.

Tax Planning. Your comprehensive retirement plan should include strategies to decrease tax liabilities, such as determining the taxable nature of your current portfolio, possible IRA planning, looking at ways to include tax-deferred or tax-free money in your plan, prioritizing tax categories from which to draw income initially to potentially reduce your tax burden and considering ways to leverage your qualified money to leave tax-free dollars to your beneficiaries.

Health Care Planning. Retirees today must have a plan to address rising health care costs with little expense. Strategies should include examining Medicare Parts A, B, and D, reviewing options for a long-term care plan and legacy planning.

It’s critical that your hard-earned assets go to heirs and loved ones in the most tax-efficient manner possible. Your financial adviser should work collaboratively with a qualified estate planning attorney to help with these tasks:

  • Maximize estate and income tax planning opportunities;
  • Protect any assets in trust and ensure that they’re distributed probate-free to beneficiaries and
  • Prevent your IRA and other qualified accounts from becoming fully taxable to beneficiaries upon death.

Your estate planning attorney should be able to give you some recommendations for trustworthy and respected professionals. You’ll also need to do your homework, and interview more than two or three to make sure that it’s a good fit. Ideally, this person will work with you, your estate planning attorney and your CPA, as part of a team, for many decades.

Reference: Kiplinger(May 4, 2018) “5 Bases You Need Covered With Your Retirement Plan”

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