Planning For Retirement- the Saving Years
Most financial planners think that you should start planning for retirement as early as possible, in your twenties, for example. That is nice in theory but very few people actually do it. And the reason is pretty simple- there are a lot of other things on the immediate horizon. There is the prospect of saving to buy a house, saving for a planned purchase (car, for example) or vacation, saving to put the kids through college, etc. All these things are important and pretty much obscure any possible retirement planning.
We are okay with delaying serious retirement planning until you reach your forties. At that point your kids are (usually!) on their own and your income is high enough to allow for some serious savings. And, most importantly, retirement is within view. That is the time you need to develop a financial plan and you need to concentrate on maximizing investment returns. And, it should be updated every year to adjust for things unforeseen in the past and to adjust for changing future assumptions.
Most people can handle the savings planning in their early career years (twenties and thirties) on their own without any professional help. Developing a household budget to plan for savings is pretty basic planning that can be done by most people. That, along with purchasing term life insurance to protect your family from an early death of a breadwinner is all that is really needed early in your career years.
When retirement comes into view, most people should engage a professional to develop a financial plan. Typically this includes developing a savings/spending plan going forward along with developing an investment plan to cover the “gap” that most people have in their income when they reach retirement age. This financial plan should be updated every year because things always change. Savings could be more or less than projected. Investment returns could be more or less than projected. Inflation assumptions may change. Or as the old saying goes, “the only sure thing is change”.
Our process for developing a comprehensive financial plan is pretty straightforward. We meet with you to fully understand your situation: your life, your children, your health, your hobbies, etc. Then we work off of a list that you provide of your assets, debts and household budget to develop the plan. We charge a fee of $750 to develop a comprehensive financial retirement plan. And our fee is $250 to update it each year going forward.
