Updating your financial plan is like an annual check-up with your doctor. You may feel good, but you just want to make sure the doctor agrees. The doctor asks you questions, performs some tests, gives you a flu shot, encourages you to eat healthy, exercise and, hopefully, sends you off until next year.
While the medical check-up is mostly a passive event (at least for the patient), a Financial Planning Check-up is much more active and requires more from the client. Here is the information we recommend that you gather for your Financial Planning Check-up:
Asset Values: What are the current values of your investments, retirement accounts, stock option plans, real estate, business assets and personal property? Many clients take advantage of our Wealth Management website. We can get daily values from most of your accounts, including:
- Savings and checking
- Lines of credit and credit cards
The website allows clients to see all of their assets and liabilities in one place. It also makes data gathering easy for our clients.
Earned Income: How much will you earn (pre-tax and before deductions) from your employer? Do you expect your income to increase with inflation? How about annual bonuses? What are reasonable average expectations? If you are self-employed, what is your net income after business expenses? Using your most recent tax returns, our experienced professionals can double check the numbers for you.
What about retirement? Will you continue to earn some income post-retirement by consulting, sitting on boards, working part-time?
Unearned Income: Are you receiving income from your business, real estate, Social
Security, annuities, gifts, retirement accounts and investments?
Savings: How much are you currently saving into retirement accounts and non retirement accounts? Is your employer contributing to your retirement accounts or granting stock options?
Debt: Have you refinanced your mortgage since we last updated your plan? We like to confirm the terms of your mortgage (interest rate, initial balance, initial borrowing date, years to amortize). Are there any other debts such as student loans, home equity lines of credit, outstanding credit cards?
Living Expenses: This item is the most important assumption in your plan. Please note that financial planning is about what you want, not what you need.
- Not including your mortgage, income taxes, property taxes and charitable gifts, how much are you spending annually?
- Will any of your expenses go away at some point in the future?
- Do you want to make annual gifts to children or grandchildren?
- Will some expenses reduce during retirement?
- Do you expect future non-recurring expenses like new cars, home projects, weddings, tuitions and vacations?
We hope you will make reasonable expense assumptions that truly reflect your spending. Exact budgeting may not be possible, but we are trying to show trends that conservatively look into the future.
Estate Planning: Any changes to your family, marital status or objectives that might affect your estate planning? Have your charitable intentions changed or would you like to discuss charitable planning? Do you expect any inheritances?
Risk Management: Any changes to your life insurance, disability or long term care insurance policies? When were these policies last reviewed?
When we complete your financial planning update, we'll contact you to schedule a 60-90 minute meeting to review the plan and financial models. We'll discuss your objectives and we'll make recommendations. We may suggest another meeting if necessary to review specific areas of your financial plan that require more detailed analysis or discussion.
Oftentimes, life happens and financial and personal objectives take a different turn. Even if your goals stay the same, tax laws, stock and bond markets and insurance policies change - and these may affect your investment, risk management, retirement and estate planning. Clients who are thoughtful and diligent about this process find that, year after year, it becomes easier and takes less time. Like a flu shot, the financial planning check-up will increase the chances that you will remain financially healthy.
For these reasons, the Raskin Planning Group recommends an annual review and planning update. Please contact us at 617-728-7433 to let us know when you would like to begin the process.
Peter Raskin is a registered representative of Lincoln Financial Advisors Corp. Securities and advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Raskin Planning Group is not affiliated with Lincoln Financial Advisors Corp. 125 Summer Street, Boston, MA 02110 617-728-7444