You resolved several months ago to become
'financially fit' at the start of the new year. So, ...how's it going?
No matter how hectic your schedule, "life unfolds slowly." But making sure
that your personal financial plan is keeping pace with your life changes
is better than 'tooling along' in the belief that not much is happening.
Your children are one year closer to college.
Or, with the last kid off to college, have you or your spouse decided to
return to work? Has your employer merged with a competitor, catching you
by surprise? How might this effect your retirement funding? If nothing
else, you can be sure you're six months older than you were six months
ago...and exactly that much closer to your own retirement.
It's likely time for an updated, or brand
new, financial plan. Everybody's different-no two personal financial situations
are exactly alike. But a process of reviewing long-term planning typically
would include weighing some or all of these issues:
Emergence funds and short-term financial
goals. Have you set enough funds aside for emergencies? Experts recommend
saving enough cash to cover three to six months of living expenses.
Insurance-Would your current life
insurance protect your family in the event something should happen to you
or your spouse? Have there been changes in your income, the size of your
mortgage, or the educational goals for your children? What about long-term
care insurance? According to current estimates, 40% of Americans over 65
will need some level of nursing home care, and the average long-term stay
lasts about three years at a cost of about $40,000 a year.
Education funding-How many kids
do you have and how many years do you have to save before your kids reach
college? A less obvious-but equally important-issue is how to accommodate
the kind of college experience your children will want...and how you plan
to pay for it.
Retirement funding-How many years
do you have until retirement? How much have you saved already? And what
about the standard of living you want in retirement? "Where you are now"
in terms of age. Current and anticipated resources and other factors form
the basis for an effective approach to this most popular and important
long-term financial objective.
Income during retirement-Arriving
at retirement with sound resources is one thing; maintaining adequate resources
throughout retirement is another. How much will you need each month to
maintain your standard of living without depleting your retirement resources
too soon? Officially leaving the work-a-day-world--and its stream of income
behind-presents a new set of issues to consider.
Each of these issues is important at some
level. Most significant, though, is to identify and prioritize the issues
that are most important in your situation. A financial planning professional
often can provide insight into issues that aren't really evident. Because
time is a tremendous ally in achieving personal financial objectives, starting
the planning process now can be especially advantageous.
Someone once observed that we should all
be concerned about the future because we will have to spend the rest of
our lives there. There's probably no better way to help ensure fitness
now and down the road then to develop a financial plan and review it regularly.
Please contact Freddie Smith at 773.643.6775
with questions concerning your finances.