So often we see people who are about to retire with a wonderfully colorful financial history by addressing each area of planning independent of others. The integration of the key planning areas provides a more purposeful planning for a greater degree of flexibility.
The expenses associated with living are the baseline to financial decisions. Whether you are financially secure or working on your financial independence, maintaining quality of life throughout your lifetime is a prime factor in our financial decision making.
What is frequently not part of the consideration is the impact on the other areas of your financial planning. For example, if you increase your obligations such as a larger mortgage or a second home purchase do you have adequate assets or insurance to continue your current lifestyle if there is a disruption in income? We have all seen the unexpected need to sell assets by the widow or widower when cash flow is reduced.
When purchasing insurance are you considering the full financial impact for disruption? Life insurance is a common purchase as most accept the inevitability of death. But many do not consider the costs of a large auto accident liability or the cost of disruption due to a disability. Nor do many consider the potential increase of care or equipment. Do you consider the future impact of immediate decisions?
The successes of life – professionally and personally are increasingly exposed to risks of a life events. And the longer we live the greater likelihood of experiencing impactful life changes. How we plan and prepare for the future while balancing the pleasures of today can determine the chances of continued success.
Purposeful planning is the coordination of life and money taking into consideration the potential life events that can disrupt financial flow. It is the thoughtful evaluation of your situation so that each cornerstone of your financial security is firmly in place to reduce financial surprises when life sends a curveball or opportunity.
The key financial planning areas are:
1. Cash Flow/Net Worth
2. Addressing immediate needs with appropriate cashreserves
3. Risk mitigation of exposures such as healthcosts and income disruption
4. Managing taxes now and in the future
5. Integrating employer benefits
6. Financial independence
7. Estate considerations
Many people address each of these with varying purposes andcalculations but do not integrate them with one another. For example:
1. Using employer benefits for life insurance that may not be available for conversion in the event of a disability or transition to self-employment. Would it make sense to use a combination of workplace benefits and independent insurance?
2. Relying on credit in the event of an emergency when the emergency may be a job layoff. The increased stress of using credit can lead to reactive decisions. Having reserves allows the time to assess and respond rather than react. Do you need to build your cash reserves?
3. Using current expected retirement income with current expenses and not applying an inflation factor to expenses. The cost of living has increased over time and generally income does not inflate at the same pace so purchasing power erodes over time. Additionally, people are increasingly underestimating life longevity. What age do you think you will live to?
How do you address these and other exposures to your quality of life? By having a team of professionals coordinating your purposeful planning. Working together can increase the probability of meeting life’s many aspects of disruption with intentional actions. And it is never too late to start!
We will work closely with you to integrate the key areas of financial planning for intentional and purposeful financial success. Our services provide the professional guidance to help you make the right financial decisions building comfort and confidence in your financial life.
Do you have more questions? Call to schedule your complimentary initial consultation at602.923.9800. We promise to listen to what is important to you to prepare your purposeful plan.Together, we can work to keep you on-track towards your financial goals.
Request a consultation with us to learn more.
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