That being said, an educated guess is much better than no guess at all, and there are many tricks and resources you can use to forecast how much money you’ll need and start saving accordingly. Having a clear idea of what you want your post-retirement lifestyle to look like, and comparing the budget for that lifestyle with your current one, is a great place to start. Dig into the details as much as you can – for example, perhaps you’ll be able to shop and cook more intentionally in retirement than you did while working, and will therefore spend less overall on groceries and eating out. But maybe you also hope to travel more, which will then make for a greater expense than you had while working.
A financial plan is any strategy you have for spending, saving and investing your money, whether it’s the cash sitting in your checking account or the stock portfolio you started building decades ago. And a financial planner is anyone who helps you formulate and/or execute that strategy.
Within these broad categories, of course, there are many distinctions and specializations.
It all depends on the complexity of the problem you are dealing with, and the amount of time and effort that you are willing to invest in solving it yourself. Many vehicle owners, for example, could perhaps save money by changing their own oil or rotating their own tires. But attempting DIY transmission repairs is much more likely to backfire. In the same way, if you are dealing with relatively few or relatively simple financial assets, you may save money by handling them yourself. But if you misjudge your own expertise, you risk losing out on a lot.
That’s the hope! While the first priority of retirement is of course to ensure that you can keep paying your bills when you’re no longer working, we think you can and should dream bigger than that. The great thing about retirement is that it presents the opportunity for a different relationship to your money – you can find ways to make it work for you, not the other way around. Savvy handling of your assets, tax liabilities and investment opportunities can make a huge difference to your bottom line!
It’s important to note that financial advisors are not legally obligated to receive certification, and many practice without it; but a CFP offers the additional assurance of professional regulation by the CFP Board.
CPAs usually examine the financial records of either firms or individuals to optimize their accounting practices and ensure that taxes are paid appropriately.
By contrast, CFPs tend to work with individuals alone, and focus on finding strategies for their clients to maximize savings and income.
For example, lawyers are fiduciaries of their clients, corporate officers are fiduciaries of their firms, and legal guardians are fiduciaries of their wards.
CFPs such as those at Wiegand are legally obligated to act as fiduciaries as well – in other words, we must do whatever we think is best for our clients’ bottom lines. Uncertified financial advisors have no such obligation, at least not legally speaking.
But one thing universally true of 401(k)s is that their funds should only be used after retirement. The Covid pandemic, for example, has given 401(k) holders a lot of leeway in accessing their funds early. Under normal circumstances, however, there are steep penalty fees for withdrawing from your 401(k) without good reason.
The point is that any portfolio will have liabilities – but if managed properly, it can nonetheless withstand the inevitable storms and keep growing in spite of them. So our approach at Wiegand is not to eliminate loss, but to manage it. Although that will look different for every client, the basic approach is the same: we anticipate declines rather than reacting to them, and we strengthen portfolios through diversification.
This communication is strictly intended for individuals residing in the states of AK, AL, AZ, CA, FL, MD, NV, OR, TN, TX, WA, MS. No offers may be made or accepted from any resident outside these states due to various state requirements and registration requirements regarding investment products and services. Securities and advisory services offered through Commonwealth Financial Network®, www.FINRA.org/www.SIPC.org, a Registered Investment Adviser.
Wiegand Financial Group, 121 Lakeside Ave. Suite B, Seattle WA 98122