To safeguard both yourself and your family, it is crucial that you have a plan in place for your financial stability. It is never too early to start planning for your future and ensuring that you can live comfortably in your senior years. Depending on your lifestyle and what you may want your retirement to look like, your financial plan can be customized to fit your vision. It is also important to remember that your financial plan is not the only thing you should be making. You should also be creating a thorough retirement plan. It is a common misconception that a financial plan will be sufficient. However, creating a retirement plan in conjunction with your financial plan will help to give you a well-rounded look at what your next steps should be. Additionally, your estate plan can be incorporated into your retirement planning and financial planning in order to safeguard your assets going forward.
Trust & Will, the leader in online estate planning services, understands how complicated and multi-faceted creating a long-term financial plan can seem, especially when you add the element of incorporating your estate plan into your overall financial and retirement plans. It can be even more confusing if you are still learning what the difference between retirement planning and financial planning really is. That is why in this article, we are going to address both retirement planning and financial planning, as well as how your estate plan can be an asset in the process.
Keep reading to learn the answers to the following questions regarding retirement planning and financial planning:
What is financial planning?
Financial planning is much like the name suggests, planning focused specifically on your finances, but often with a concentration on the short-term rather than long-term. This is also the most common form of planning we tend to think about in regard to our finances. With this form of planning, you will look specifically at your income and factor in your necessities for your day-to-day life, and what those costs may amount to. Financial plans will of course look different for everyone depending on their preferred lifestyle and their personal income and budget. Once you have your necessities factored in, you will be able to sit down and take a look at the amount of money you can place in savings for your future to ensure you are preparing for your future financial needs. This could include putting away a portion of money for emergencies, or the amount you choose to put in your 401k account. Essentially, financial planning will help you create a budget as well as start investing your money to save for your future.
What is retirement planning?
While financial planning focuses on your current finances and investments for your future, retirement planning focuses specifically on your finances within your retirement and how to ensure you have the adequate funds available for the life you desire after you retire. Retirement planning tends to be more long-term focused than financial planning. Retirement planning is more focused on the money you have in savings and investments and how best to manage those assets so that they will generate sufficient funds for your retirement years. Retirement planning takes a more in-depth look into your specific needs and develops a plan to secure the money you invested so that it can generate the funds you need for your day-to-day life in retirement.
Why do you need both?
It is important to complete both financial planning and retirement planning because the two work in conjunction with each other. In order to have a sufficient and fully comprehensive retirement plan, you must first have a financial plan set in place to start helping you begin investing your money. However, without a retirement plan, it can be hard to know how to break down your investments into monthly allowances to fit your lifestyle needs and to understand how to make sure those investments continue to generate income during your senior years. You need both short-term and long-term planning, and having your financial plan and retirement plan work in conjunction with one another will do just that.
How does your estate plan factor in?
Now that you understand the importance of financial plans and retirement plans, it is important to determine how you are going to safeguard your plans to ensure that they will be protected even if you were to unexpectedly pass away or end up in a coma and unable to make financial decisions for yourself. Follow these tips to protect yourself and your family.
Create a Will
It will be very important to calculate your investments and other assets into your financial and retirement plans and to be sure you have an asset protection plan in place should you pass away. To do this, you will want to list all of your investments, assets and beneficiaries in your Will. With a Will, you will be able to legally appoint the person(s) to whom you would like your investments bequeathed if you should die. This person will be known as your beneficiary.
Appoint a Financial Power of Attorney
If you were to become temporarily or permanently incapacitated, develop Alzheimer’s disease, dementia, or any other illness or condition that could deem your incapable of handling your own affairs, you will need to have a plan in place. In this situation, you will want to appoint someone you trust to take over the responsibility of handling your affairs and oversee your finances and investments in accordance with your financial and retirement plans. This is where a Financial Power of Attorney comes in. Your Financial Power of Attorney is someone you give legal permission to handle your finances in the event that you cannot.
Creating your financial plan and retirement plan can be stressful. You don’t want to add complicated estate planning into the mix. With Trust & Will‘s easy-to-navigate online estate planning website, the hassle and stress of creating a comprehensive estate plan have been virtually eliminated. Take our free quiz to see where you should get started, or compare our different estate planning options today!
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Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.
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