Comprehensive Financial Planning Involves Much More Than Investing
by Gabriel Lewit
Planning for your future is a multifaceted endeavor in terms of building wealth. It involves ample time, in-depth research, thoughtful strategizing, ongoing monitoring, accurate reporting, and more analysis than one may think. It’s far more complex than simply investing in the right assets, which makes going it alone a risky proposition, especially during such economic uncertainty!
When you work with a financial advisor in Buffalo Grove, IL., they can assist you in developing a comprehensive financial plan that addresses all of your personal needs and financial goals.
This article will explore what comprehensive financial planning is comprised of:
- It’s about building a long-term, professional relationship with your financial advisor who understands your specific needs and goals
- It’s about documenting your goals, risk tolerance, investment time horizon, etc.
- It’s about creating a plan that addresses how you can build your wealth over time using sophisticated planning and investment processes
- It’s about applying disciplined investment strategies and decisions that can protect your money, while exploring ways to grow your principal
- It’s about utilizing strategic asset allocation that can reduce your tax liabilities
- It’s about developing a plan that looks forward to your retirement years to ensure your money outlives you
- It’s about incorporating your estate and legacy planning to protect what you’ve worked so hard to build for your loved ones
The intent of a comprehensive financial plan is to serve as a roadmap through various stages of your life including working and retirement years. The plan should also take into consideration major life events, planning for the unexpected, as well as address how your money plans should react during times of high inflation. The key is to start now, not when retirement is knocking at your door.
The team at SGL Financial provides comprehensive financial planning and investment advisory services to high-net-worth individuals and families in the Buffalo Grove, Il area.
How to prepare for comprehensive financial planning
The first step towards financial independence is the development of a financial plan that outlines your financial concerns, as well as your financial goals. Once you have selected the right financial planner to assist you with this process, they will begin their efforts by reviewing:
- Your current financial standings, including assets, real property, and any debt you have
- Your short and long-term financial goals
- Any known upcoming or recent life events that could impact your financial plan (marriage, divorce, loss of spouse, retiring, moving, etc.)
- Your tolerance for risk
- Your time horizon (when you need funds to be available for various events)
- Your financial biases and spending behaviors
- Any experiences from your financial past that may cause worry
- How much you want to be involved with your finances
- Any questions and concerns you have about our process
At SGL, we look forward to exploring your unique financial needs and building a plan that pursues what financial freedom means to you.
At SGL, we use four pillars of financial planning to create a customized financial plan for you: Income, Investments, Taxes, and Legacy.
Working together, we identify what your income needs will be at different stages of your life. Most people focus on saving for retirement but don’t place as much emphasis on how much income they will need once they retire. As you develop your plan, ensure that these two components are included:
- Your expenses never exceed your income
- You don’t want to outlive your wealth
Your plan should include variables such as health care costs, your life expectancy, and inflation. A retirement stress test can help you establish a plan that will account for these variables calling for tax-efficient, reliable, and sustainable income in retirement.
Social Security alone may not suffice for retirement living expenses. The program was created initially as a supplemental resource for those who needed it decades ago: this was not intended to be the sole source of income for retirees.
To see if you have enough retirement savings accumulated, apply the 4% rule. If you can live comfortably on a yearly 4% withdrawal from your retirement account(s), which can adjust each year based on inflation, it could be assumed that your savings could last for at least 30 years. This is not a guarantee that your funds will last 30 years, but it gives you a better sense of how you will manage your retirement savings based on how much income you will need once you retire.
Talk to a financial advisor in Buffalo Grove, IL, about annuities, which can provide a guaranteed income stream for retirees.
Working with a qualified financial advisor can assist you in creating an investment plan that addresses ways to reduce your taxes, avoid common investing pitfalls, nurture and grow your wealth, and illuminate your ideal path to retirement. When it comes to investment planning and investment management, our team of professionals focuses on investing for a long-term strategy.
When designing your portfolio, we use “evidence-based investing.” This means that your investment plan may include:
- Short and long-term goals
- Savings strategy: How much you can save now vs. in the future
- Current assets
- Tax exposure concerns
- Risk tolerance
- Timeline for achieving goals
- Investment approach
- Strategic asset allocation and rebalancing
The third pillar that should be included in your planning efforts includes a review of your tax liabilities. You need a well-thought-out strategy well ahead of retirement to minimize taxes. If your efforts fall short, you could be handing over an undeserving portion of your nest egg to the government each year.
- With the guidance of a financial advisor in Buffalo Grove, IL, there are many strategies that you can deploy to reduce your tax liabilities:
- Health savings accounts (HSA)
- 529 college savings plans
- Maximizing your employer-sponsored retirement contributions (e.g., 401(k)
- Roth conversions
- Asset-withdrawal strategies
- Life-insurance strategies
- Managing required minimum distributions (RMDs)
- Implementing strategies for tax-free income
- Charitable giving
It helps to know that, unlike many other firms, SGL Financial offers tax preparation services on top of financial planning. When you partner with SGL, you get a true team of tax and financial planning professionals in one office.
Estate planning and legacy planning
The fourth pillar is planning ahead when you are no longer able to do so for your family. The estate planning process includes documenting how you want your assets disbursed should you become incapacitated or after you pass. A comprehensive estate plan can include:
- Establishing guardianship for your children
- Setting up a trust
- Designating a power of attorney
- Reviewing and assigning beneficiaries
- Creating an advanced healthcare directive or living will
- Strategizing tax minimization in hopes to leave as much of your estate to your heirs as possible
This is what makes legacy planning and estate planning an integral part of your comprehensive financial plan.
Get started with SGL
To formulate your own comprehensive financial plan connect with a financial advisor in Buffalo Grove, IL. With a right financial plan, you can alleviate financial planning burdens and live more freely by relying on a team who can lead the way through any economic environment. Give us a call or schedule your appt. today!