Reviewing Your Financial Plan
Everyone has dreams they want to achieve in life, and for most of us, being able to step away from mandatory work is one of many. But retirement is a challenging feat, and reaching it requires a solid financial plan. A plan that goes beyond a fixed point in time and receives annual reviews and updates to reflect your life as it changes.
Life Is Not Static, It Changes
When you first created a financial plan, perhaps you were fresh out of college or just bought your first home. However, with time your job will change, your pay will increase, and your personal life will evolve, maybe with the addition of family members or relocating.
Balancing your retirement goals with other financial goals and requirements that have arisen since your last financial review is crucial. During this process, some people will find they can save more, while others will have a newborn or a mortgage and need to stash away less.
Regardless, since our lives are constantly in flux, it is vital to carve out time for yourself or with an advisor to update your plan annually or whenever a significant change occurs.
During these reviews, one factor that can change is your risk tolerance. Our risk tolerance changes vary from person to person. Still, overall it is due to our lives becoming more established and our desire for fewer fluctuations in our portfolios as we get closer to using them.
Therefore, managing risk in our financial plan involves weighing our need for portfolio growth with our need for stability. Generally, these decisions entail shifting our allocations from being stock-heavy to including a mixture of bonds and other more stable investments.
Still, this method is different for everyone; tailoring it to your needs and not someone else's is vital. After all, this is your financial dream!
As you age, you will likely find yourself less burdened by the expenses of your dependents, and your income will rise. Thus, you can and should save more so that your retirement is comfortable.
It would help if you strived to save a minimum of 15% yearly, which should increase as retirement approaches and our debts dwindle.
Sticking To Your Plan
Lastly, sticking to your retirement plan is perhaps the most critical piece of advice we at Lundeen Abrams Advisors can provide. Often, people set unrealistic savings goals that cause them to struggle financially elsewhere in their lives.
It is important to ensure you save enough to make an impactful difference while not setting the bar so high that you set yourself up for failure. Further, while your life will change and you may feel pinched to save, it is crucial to keep some level of savings in place so that you stay on track. Just because you have a family now doesn't mean you should divert all your savings from your future for that of your dependents.
Retirement planning is a tedious but essential part of our financial journeys and varies from person to person. If you need help crafting or maintaining a plan that helps you achieve your dreams, please contact us and schedule an appointment. We regularly help people of various ages, wealth, and upbringings and look forward to assisting you soon. Have a great day!