3 Reasons Why You Need a Financial Plan

I get a lot of similar questions from clients and people I meet regarding financial planning.  One question that comes up quite often is how much someone needs to save for a comfortable retirement, and where should they be saving.  That’s a very difficult question to answer at a cocktail party, but a very important one to be asking.

Because everyone has a different picture of what they want their retirement to look like, working toward that goal becomes more and more important as the years roll on.  As someone gets into their forties, especially late forties, building a road map toward retirement becomes a solid strategy for success.  This road map takes the form of a financial plan.


Building a financial plan helps us to create a baseline on which to build over the years.  Following are three reasons why doing a financial plan with an advisor makes sense:

You build a current snapshot of your financial situation.  You’ve probably heard the saying, “how can you know where you’re going if you don’t know where you are?”  It helps to take an assessment of your investments, insurance, tolerance for risk, and goals for the future.  If you need to address any shortfalls in risk protection, now is the time to do it.

You discuss what you want your plan to look like.  Everyone is different.  The way you plan for your future will probably be different from your friends and colleagues.  Also, we’ve enjoyed a stock market that has seen impressive returns for nearly a decade…do you have a plan for any pullback in the market?  These are concerns that conversations with an advisor should address.

Once you’ve agreed on a plan, you meet regularly to see how you’re tracking toward your goal.  One thing is certain—projections of how your money will grow and what your “expected” retirement date and balance will be are going to change every year.  If you’re working with an advisor and having regular reviews, you’re able to keep on track and keep your goals in focus.

Planning for a retirement that is twenty or thirty years down the road may seem like something that is easy to put off.  Work, school projects, sports, and a myriad of other things occupy our time.  Knowing that we have enough life and disability coverage to protect our families, and that our assets are allocated correctly can surely bring about peace of mind.  By arming yourself with this knowledge as you enter your peak earnings years, you are setting yourself up for a more successful financial future.