Are you on your way to retirement? How a financial plan can help you

Investing money for retirement can be daunting, especially since it’s common for future retirees to worry about whether or not they’ll have enough money to last them into their golden years.

There are a few rules of thumb out there aimed at helping you figure out where you stand in retirement savings. One analysis found that you should have at least your annual salary saved up by age 30 to be on track to retire by age 67. And by age 40, you should have three times your annual salary saved up.

Another strategy uses the 4% rule to help people calculate their retirement number: You just need to multiply your annual expenses by 25 to come up with an “end goal” of how much money you’ll need before you can retire with enough money to last 30 years.

But before you try to start crunching the numbers, there’s another important way to track your retirement savings progress, and it’s probably the first strategy you should turn to. Liz Sheehan, Senior Vice President of Wealth Management at UBS, recommends making a financial plan when you start thinking about retirement.

“Unfortunately, there are no shortcuts,” says Sheehan. “A comprehensive financial plan is the best way to know if someone is on the right track.”

A financial plan can give you a clear idea of ​​which areas you are already meeting your goals and which ones you need to focus on more. Part of making a proper financial plan means making things clear that you need do and want do as you work toward retirement. For example, if you know you want to travel the world in retirement, you’ll need a lot more money to cover those travel expenses than in a case where your ideal retirement looks more like downsizing and moving to a low-cost area of life.

According to Sheehan, there are a few questions you should consider when coming up with clear goals and a plan for your retirement:

  • How do you imagine your life and family in 10 years? 20 years? 30 years?
  • If you didn’t have to work, how would you spend your time?
  • What would you like to accomplish with your wealth?
  • Are there any financial issues you would like to address through the financial planning process? (Do you want to buy a house and/or how to pay for your child’s university)

Of course, planning for your retirement is about more than figuring out how much money to invest each month. You will also need to consider other areas of potential change that you may encounter in life.

“Financial planning goes beyond basic budgeting and evaluates topics like insurance planning, liability management, and estate planning,” says Sheehan. A financial plan should also include asset allocation review, education planning for children (including how to pay for college tuition), charity planning and insurance analysis, she further explains.

Of course, you don’t have to try to answer all of these questions and scenarios on your own. A financial planner can help you navigate the process no matter what stage of life you’re in. You can also discuss which tools might be best to use to achieve your goals. For example, robo-advisors, such as Wealthfront and Betterment, automatically adjust your investment portfolio allocation based on your goals and risk tolerance, so this could be a solid recommendation for someone wanting an approach to retirement. more practical, but still personalized to invest.


On the secure Wealthfront site

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts

  • Commissions

    Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront’s annual management advisory fee is 0.25% of your account balance

  • Bonuses

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash. Additional asset classes in your portfolio include real estate, natural resources and dividend stocks

  • Educational resources

    It offers free financial planning for college planning, retirement, and home buying


  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment does not require clients to maintain a minimum investment account balance, but there is a minimum ACH deposit of $10. Premium Investing requires a minimum balance of $100,000.

  • Commissions

    Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of the fund balance as an annual account fee; Premium Investing has an annual fee of 0.40%.

  • Bonuses

    Up to $5,000 managed free for one year with a qualifying deposit within 45 days of enrollment. Valid for new individual investment accounts with Betterment LLC only

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash

  • Educational resources

    Improvement offers board and other educational materials

Terms apply. Does not apply to cryptocurrency wallets.

“Financial planning is a process, it’s not something that is done once in isolation and never revisited,” explains Sheehan. “I suggest clients review their financial plan once a year or during any life change.”

Bottom line

A financial plan is one of the most important strategies you can use to figure out if you’re on track for your retirement goals, as the plan includes both qualitative and quantitative aspects of your goals. If you don’t know how to start creating a financial plan or what should go into your financial plan, a financial advisor or planner will be able to help out.

Editorial note: The opinions, analyses, reviews or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, approved or otherwise endorsed by any third party.


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