Filling in the Holes of Your Financial Plan
Like anything else in life, planning is key to being financially on track. It often is not a focus until a life event triggers a concern or wish, such as a marriage, divorce, birth, death or upcoming retirement. Here are some things to think about to help you identify the holes in your financial plan.
Address Retirement Savings Gaps
As you examine your financial plan, at the end of the day, you want to have enough money to cover all of your needs. If you’re coming up short, here are a few options you can keep in mind:
- Work longer – If you haven’t saved enough money for retirement, it may be inevitable that you have to delay retiring. While staying in the workforce could be less than ideal, it is still an option to make sure you are set when your time to retire finally arrives.
- Save more money – There may be circumstances, such as health issues that may prohibit you from being able to delay retirement. Learning to live with less today so that you can be financially set tomorrow is well worth tightening your belt. Track your expenses for a month or two and identify things that you can reduce. More disciplined spending will allow you to tuck money away for expenses down the road.
- Earn more on your investments – You may need to address the risk-reward of investing to ensure that you will not outlive your money. This is best done with the help of a trusted financial advisor.
Make Sure You Are Adequately Insured
If there are gaps in your insurance coverage, you may need to address those to have a healthy financial picture. Getting more insurance coverage relies on the cost, coverage and underwriting.
- Life insurance – If you need more coverage, you must decide which type of insurance makes sense for you. There are a variety of products, including Term, Universal Life and Whole Life. Whole Life insurance accumulates cash value and pays a benefit upon the insured person’s death. Term life insurance pays a benefit on the insured person’s death during a specified term. Universal Life insurance is a permanent policy, and any excess payments made are credited to the cash value of the policy. Depending on the cost and coverage, you need to decide which makes sense for your budget and gets you the coverage you need. Insurance underwriting figures prominently in determining the premium cost based on health standards set by the insurer.
- Disability insurance – Does your coverage at work suit your financial needs if you become disabled? If your current coverage leaves a large gap in your income, you may need to consider personal disability coverage.
- Long-term care insurance – For long-term care and estate planning, this type of insurance provides many options. Evaluate this according to your needs, alongside the ongoing income you may be receiving from pensions and Social Security.
Examine Your Investments
Think about your investment savings and the allocation between bonds, stocks and cash.
- Consider what your risk tolerance is for retirement savings. How do you deal with the swings in the stock market values?
- Think about your timeline until retirement. How long do you have until you will need to use the money you are saving now? This will be a factor in how you invest your money.
- Consider how long will you need the money. Life expectancy is an unknown factor, but will also influence how you plan.
Complete Your Estate Planning
Have you completed your estate planning?
- Having your will, advance medical directive, living will and durable power of attorney will help your family greatly in the event of your death. Remember to have these documents in a safe place and keep them up to date with major life changes.
Maybe as you read this, you’re finding one, two or more holes in your financial plan. That’s okay, but you don’t want to leave those holes unfilled. Contact Wood Smith Advisors for a consultation today. We’ll help you create a plan for a smoother future.
Wood Smith Advisors, a Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals.
“Finance Made Simple” blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.