If you’ve ever completed a financial plan, you know how much work it is to prepare. So, after all that work, you’re done, right?
Wrong. The world is constantly changing, the markets are constantly fluctuating, and so is your life. If your plan for the future is going to be of any real use, it has to reflect those changes, too. Instead of a static document, your financial plan needs to be like a dramatic series — a script that changes with times.
How often should you revise your plan? The easy answer is this: whenever there’s a major change in your life circumstances. Let’s take a closer look at what you’ll need to pay periodic attention to:
Family changes. These include the births or adoption of children, marriage or divorce, and changes in your health or that of your partner or spouse. It could also involve changing those you name as heirs for any number of reasons, including deaths, births, or simply a change in your preferences.
Career and income changes. For most people, their lifestyle today and the one they plan for retirement is closely related to their current income. If you’re promoted and your income bumps up or you change careers or lose your job, your current lifestyle is likely to change and you might need to reset your goal for your retirement as well. In fact, anything that dramatically changes your asset values — like an inheritance, the sale of a business interest, or uncovered medical expenses — could also mean it’s time to reset the scope of your retirement lifestyle.
Market returns. Market volatility can wreak havoc with your plans for the future. Over the last 10 years, we’ve experienced two major bear markets in stocks and one of the most severe losses in average home prices in U.S. history. As a result, millions of people have had to reconsider how long they’re going to have to keep working, what kind of lifestyle they should aim for, and/or how much more they need to be putting away.
Even without major gyrations in the markets, it pays to review the investment and asset components of your financial plan at least once a year.
What’s important is to check your progress toward your long-term goals, and remember that you’re more likely to be in a marathon toward your goals than a sprint. On the other hand, wide divergences from your trend line may mean that you need to save more, devote more of your income to other needs or goals, or change your asset allocation strategy. It can be a mistake to let your financial plan sit too long unattended. Much has changed in just the past few years.
Reesa Manning is Vice President and Senior Financial Advisor at Integrated Wealth Management, specializing in retirement and income planning. For more information, call Reesa at (760)834-7200, or [email protected].
The above is being provided for informational purposes only and should not be considered investment, tax or legal advice. The information is as of the date of this release, subject to change without notice and no reliance should be placed on such information when making any investment, tax or legal decisions. Integrated Wealth Management obtained the information provided herein from third party sources believed to be reliable, but it is not guaranteed. Form ADV contains important information about the advisory services, fees, business, and background and the experience of advisory personnel. This form is publicly available and may be viewed at http://www.adviserinfo.sec.gov
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