Do I have Enough?

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As financial planners, one of the most asked questions we hear is, “Do I have enough?” The response is always, “That depends!”

First it depends on what is behind the question.

  • Do I have enough… to retire comfortably? (and what is comfortable is a whole discussion in and of itself.)

  • Do I have enough… to achieve my goals today and still retire while I can enjoy it? (What goals, what age?)

  • Do I have enough… to live the way I have been living? (How have you been living - getting by month to month, spending all you have, or saving a specific percentage of income?)

  • Do I have enough… to send my kids to college AND retire?

  • Am I making enough… income and portfolio investment returns to retire and live to 100? After all, my grandmother lived to 100!

  • Will my spouse have enough… after I’m gone? Have the two of you actually talked about what it might look like?

  • Am I saving enough… so that I can have financial peace of mind? (i.e. sleep at night)

Once we have defined the question, we must dig deeper to find the answer.

Because, you see, no two individuals, couples, families are alike. We may find some of the same basic needs, but the similarities end there. As unique as each of us are, that is how unique the answer is to the question “Do I have enough?”

According to Forbes Magazine, the following are retirement savings targets from well-known resources that can serve as benchmarks:

As you can see, even the experts cannot completely agree – except on the fact that preparation is key if you are to have ENOUGH! So where is a good place to start?

To answer the question of “Do I have enough?” begins with knowing a few critical components of retirement:

1.      What are your current income/expenses? What are your estimated expenses during retirement (and semi-retirement if that is part of your plan)

2.      How do you see your anticipated lifestyle in retirement?

3.      What is your expected income in retirement (social security, pensions, etc., and any shortfall that must be enhanced with retirement savings)

4.      What are your projected costs of goals and expenses leading up to retirement (college expenses for children, costs of starting a new business, etc.)

Consider these examples: One person spends 85% of his/her current net income on rent/mortgage, groceries, and basic clothing. Another spends 35% of his/her current net income on essential monthly expenses and uses the rest for saving and paying off their mortgage early. The first one will more than likely need a greater percentage of their current salary in retirement than the second one will. Consider the difference in the answer to the question “Do I have enough? between the one who has planned to downsize in retirement and spend time with nearby family, possibly continuing to work part-time, as compared to the one who has waited until retirement to finally build that dream home and travel. Their retirement expenses and needs will look very different.

Some people would prefer the trade-off of retiring early at the expense of a lower standard of living whereas some would prefer to work longer for a higher lifestyle in retirement. The scenarios are endless.

If you are like many, seeing the benchmarks alone makes you cringe because you cannot picture reaching any of these goals. Could it be that you are young and with some strategic adjustments, you could save more in the early years and set yourself up to prepare for your retirement and meet other significant goals? Maybe instead you are in the final decade of your career and you could optimize your savings and develop a smarter investment strategy to grow your wealth while you are still working.

Studies have shown that working with an investment adviser makes it

much more likely that you will achieve your savings and investment goals.

Experience, professional guidance, and an unbiased second set of eyes can help you determine whether you are on the right track and what steps to implement by developing a comprehensive financial plan tailored to fit your needs.

Bridge Financial Planning offers fee-only planning for busy professionals who want to know the answer to the question, “Do I have enough?”

We offer a no cost, no obligation initial consultation to learn more about your needs and for us to share more about our process and philosophy on building a plan that meets your goals. Schedule your initial consultation HERE.

 

What is financial planning?

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Imagine the scenario: a new prospective client visits our office for an initial consultation, and we ask them what their main objective is for our potential work together. Oftentimes they’ll start by talking about their current advisor or past experience with one. They’ll tell us about the balance of their portfolio and a few even know their asset allocation! But they become really enthusiastic when they move on to what they want to accomplish in their life. They tell us about their family and careers and hobbies and dreams. We love to hear about their biggest accomplishments and what they’re still hoping to achieve. Why does this scenario play out so often? Because planning is so much more than just investing!

 

We believe investment management is a core tool to achieve long term financial goals, and know that the work doesn’t stop there.

 

Can you imagine the amount of stress that would be reduced when you have a workable plan for your money that addresses your current cash flow, your future, and is adapting to your life? We can. We’ve seen the difference it can make!

If your financial advice consists solely of the return on your investments, then you have missed out on the professional guidance and financial peace of mind that a comprehensive financial plan can offer.

A solid comprehensive financial analysis should include at least the following:

Cash Flow Planning:

Do you know how much of a surplus or deficit your household has each month? Do you know the changes you could or should take to meet your and your family’s short and long-term goals? Is inflation factored into these plans?  Good cash flow planning involves not only an emergency fund, but analysis of current and future needs with a solid plan to manage your money in a way that reflects what is important to you.

Cash Flow is the true foundation of any plan. For business owners, income is often inconsistent, so they generally have a good understanding of their expenses but not always on income. For corporate employees, the opposite is often true: they know what they make but can rarely give a detailed record of spending. Either way, without a good understanding of cash flow, it’s impossible to identify how much is available for additional savings, debt reduction, or any other goal you may have.

Retirement Planning:

Everyone’s idea of retirement is unique to them and their family. What do you want retirement to look like and what are you willing to do now in order to make that a reality? A plan is necessary to have a reliable stream of income through retirement assets, maximizing Social Security benefits, and pensions, in addition to knowing what the alternative plan is if one spouses dies or becomes disabled. 

Insurance Planning:

As fee-only financial advisors we do not sell insurance. We evaluate your potential risks and factor them into your financial future. Without considering these risks, your entire plan may collapse with one unexpected event. If you have an agent you work with now, that’s great. If not, we’re happy to recommend one.

Investment Planning:

We believe in keeping emotions in check, good diversification, and low expense ratio investments. Your time horizon and risk tolerance are always considered. We offer a full range of investment solutions and portfolio management services.

Tax Planning:

No comprehensive financial plan is complete without considering the impact taxes will have on various financial scenarios. Which retirement vehicles will place you in the best tax situation now and in the future? Certain investments, cash flow choices, and timing should all be examined for their effect on your overall financial picture. As always, we recommend you consult your CPA.

Employee Benefits/Health Care:

This is often an overlooked aspect of financial planning, but can significantly alter your plans if healthcare costs, employer health coverage, and long-term medical needs are not incorporated in your financial discussions and planning.

Estate Planning

We are firm believers that a good estate plan is a necessity. It’s more than just a will, too! A good plan will include wills, health and financial Powers of Attorney, a health care directive, and potentially trusts.  If your estate plan is in place, we evaluate account titling, beneficiary designations, and other items to make sure your intentions are being taken into consideration with your current situation. If you don’t have an estate plan in place, we’re happy to recommend an estate planning attorney.

And the list goes on! College planning for your kids, student loans, legacy planning –

 

Significant life choices should all be incorporated into

a comprehensive plan that is both practical and actionable.

 

By prioritizing your goals and breaking the plan into manageable pieces, a detailed plan from a Certified Financial Planner professional can assist in mapping out your financial future. Financial planning is an ongoing process that is built around your core values as well as the ever-changing needs and desires for you and your family. This is why we encourage our clients to continue to update us on their changing circumstances.

For the clients that we serve, we are grateful to be part of identifying and implementing planning and asset management strategies that are aligned with your priorities and values. For those of you who have not scheduled a free initial consultation, what are you waiting for? It would be a privilege to help you achieve your desired future. Book an initial consultation here.

 

An Advocate for Your Current and Future Self

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According to the dictionary, an advocate is “one who pleads the cause of another” or “one who defends or maintains a cause or proposal”. An advocate stands in the gap, fights for or on behalf of another, and supports or recommends a particular policy or plan.

This is exactly what your financial planner should be! And not only should your financial planner be an advocate for you today so that you can experience financial stability and freedom in the here and now, but they should also be the advocate for your future self! The “you” you want to be with the choices you want to have.

Let’s say you’re just getting started. You have your whole life in front of you. So why do you need an advocate? Because the choices you make today, even the seemingly small ones, can have a BIG impact on your future. It’s natural for your “NOW self” to want to spend more and save less! “NOW Self” wants to put off spending time going through all that boring paperwork of employee benefits, life insurance policies, loans, credit cards, tax returns, wills, and banking/investment statements with confusing fees, yields, transactions, and fine print. But today you’re in the best position to make educated decisions and implement strategies that will absolutely alter the course for your “FUTURE Self”.

Let’s say you are mid-career. You have more responsibilities than you have ever had: careers, growing children, aging parents. You need a vacation! You also need a financial advocate. “NOW Self” is extremely busy spinning many plates and has substantial expenses. You may not feel like there’s time or money for an advocate, but the need is pressing. “NOW Self” either has made some good decisions but needs an objective set of eyes and expertise to maximize the potential or has not been able to make such good decisions and needs to make major adjustments so that the journey is smoother, and the destination is where “FUTURE Self” wants to go.  

What if you're near or already in retirement? You have more to offer than ever – especially your wisdom and experience! You may be at the top of your game, thinking about retiring soon or maybe never, starting a second career, aspiring to work on the side for a cause that’s close to your heart, or simply relax! “NOW Self” may be in the best financial position of their life OR may regret not making financial decisions earlier and feel like they cannot make new changes. No matter your financial situation, you need an advocate to give you a vision of the possibilities you have with what you have worked hard to achieve. Planning is crucial at this point to take advantage of tax laws, retirement income and social security strategies, and investment portfolio allocation so that “FUTURE Self” can do and be all they ever desired.

 

A good financial planner will advocate for not only your “NOW Self”, but your “FUTURE Self” as well, challenging clients to take action toward their best lives.

 

One of our most important jobs is to LISTEN. We cannot effectively be your advocate if we do not know you, your unique situation, and what you truly need and want today and in the future. We want to know you and your family, your history and what your dreams and goals are. How else can we help you achieve your goals and get to where you want to go if we do not listen to your story?

Our initial consultation (no cost or obligation) is about listening to why you are looking for a financial planner in the first place, and then listening to hear what YOU want to tell us. Information is powerful. Wisdom to know what to do with that information is even more powerful!

After listening and understanding, we use our knowledge and technical skills to design plans and strategies for outcomes that are in line with what you want to achieve. Our goal is to educate and encourage clients to make the decisions and choices that will improve their financial lives. This includes providing advice and implementation support to make that happen. As your financial advocates we can encourage you to stay disciplined and make choices now and in the future that align with your vision of success.

We do this through evaluating topics like cash flow, investments, retirement, insurance and tax planning, and by providing ongoing professional support. By making you aware of the possible strategies and outcomes, we can guide you to a plan that is tailored to your needs and priorities, helping you be confident in the decisions you’re making now, for now and later!

We want to be the advocate for both your “NOW Self” and your “FUTURE Self”, intentionally helping you create a life you love, full of purpose and financial freedom that gives you choices. So that when you look back, you will have achieved your goals and are living life to the fullest.