Allon Planning

April 27, 2021 | Reading Time: 3.0 min

Do I Really Need a Comprehensive Financial Plan?

We find ourselves in unprecedented times as the onset of COVID-19 has severely impacted our world, our lives, our work, our community, and for so many — our finances. We all knew an eventual market decline was inevitable, yet many did not expect it to be incited by a global health crisis. As a result, many investors have seen a steep decline in their investments and are fearful, seeking and questioning how this affects their retirement.

Many working adults are unaware of how much money they really need in order to live comfortably in retirement. According to the EBRI, a sizeable percentage of workers say they have no or very little money in savings and investments, and that workers who have a retirement plan have significantly more in savings and investments than do those without a plan[1].

Comprehensive financial planning is imperative for optimal success in your retirement years. Most people have a financial planner, but many do not have a financial plan. A financial consultant can offer their expertise and advise you how and where to invest or what stocks to pick, or sell you a product, but if you do not have a fiduciary advisor who has hand-crafted a holistic financial strategy for you, it may be time for a second opinion.

How do you know if what you have is a true plan? Simply put, there are three basic components of a comprehensive financial plan.

The first component is retirement and income planning. This includes Social Security income, long term care and life insurance, savings, and investing in retirement accounts. You also must then have a strategy in place to eventually begin taking distributions from those investments at the proper time in order to create your desired income.

The second component of a comprehensive financial plan is a tax plan. You want to make sure you don’t pay unnecessary taxes and that you are making the most of all tax benefits available to you. It’s important that your CPA and financial advisor are working together, specifically in this area.

Finally, the third component is an estate and legacy plan. This piece includes all legal documents, wills and trusts, and a strategy for transfer of wealth.

All three of these components must be addressed in order to truly have a comprehensive financial plan.

Covid-19 has brought along with it many unexpected and unfortunate consequences. Yet there remains much good in the midst of all we are facing. If you are one who does not have a plan in place or if you aren’t sure if what you do have is really a plan, then maybe, just maybe, you can use this financial crossroads to your benefit. Take this opportunity to plan. Plan for your future. Plan for retirement. Plan for the unexpected.

You’ll be so glad you did.

[1] Source: Employee Benefit Research Institute, 2019 Retirement Confidence Survey

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