What Can You Do to Make Sure Your Financial Plan Works for You?
There are so many opinions out there as to what people should and should not do. “Never do this / Never do that / Always do this / Always do that”. This misinformation and overcomplication cause most people to get overwhelmed and confused and leads to not making decisions (which is in fact a decision in and of itself). The fact of the matter is there are some basic principles that can be implemented to make certain your retirement is planned properly and you can secure your future.
Before we explore a viable strategy that can be used by most people (with some customization) let’s review some of the basic rules of what NOT to do.
- Do not chase the highest-performing investments from the previous year. Often these investments are touted and most people chase the “latest and greatest” and are too late to the dance and buy at the peak which is a great way to lose money.
- Do not attempt to “get rich quick” and try to find the next hot stock. This can cause you to lose your principal.
- Avoid listening to “experts” telling you to never or always participate in certain investment or insurance strategies. Everyone’s situation is unique and you must customize your particular strategy.
- Do not participate in investments that are “too good to be true”. This will likely end up bad i.e. Bernie Madhoff.
The above examples are the equivalent of the “magic diet pill” and we know those never end up working. Just as we need to have a basic diet and exercise plan to maintain good health there is a basic strategy that can help you “get there” when it comes to retiring comfortably.
Here is a solid recipe that could help you establish good habits and be thinking with the “end in mind”
- Save a total of 15% of your income toward retirement. A basic portfolio of stocks, bonds, and mutual funds are most likely appropriate. You may consider seeing a financial professional that can create a solid and diversified portfolio for you.
- As part of the 15% use a 401(k) (especially if it offers a match). If there is a Roth 401(k) feature at your employer, strongly consider it.
- Purchase permanent life insurance with about 5% of your income (if you need protection now or will likely need it in the future). Permanent life insurance serves two specific purposes:
- It can be used as a safe bucket to use in retirement when your stocks, bonds, or mutual funds are down in value.
- It will serve as a “permission slip” to spend all your money and provide a greater distribution rate of your funds while ensuring you will still leave a legacy. (if that is important to you)
This basic strategy will most likely put you in a position where you will likely have enough money to provide a solid retirement income for yourself and your family. Of course, the devil is always in the details and you should connect with a financial professional that is adept with this strategy.
Learn More About IFW’s Retirement Planning Education Services
The IFW provides valuable financial education, resources, and services that help people live their best life.
Please remember, be mindful of the messenger that positions certain products or services as “always” bad or “always” perfect. The fact of the matter is there are no “bad products” or “perfect products”. The right product is the one that aligns with your goals and objectives.
The Institute of Financial Wellness believes when it comes to financial decisions; never say “Never” never say “Always”…It Depends.
Rees Bridges brings a unique value to the IFW as both a highly accomplished creative professional and a successful financial services executive to serve in his role as Senior VP, Marketing & Communications.
Over the last decade Rees has served as the lead marketing & communications professional for a Fortune 500 Financial Services firm. He oversaw all advisor marketing strategies, client communications, and the entire firms branding and marketing initiatives.
Rees continues to pursue his passions as a creative professional & musician for over 30 years, with an impressive profile and reputation as a designer, performer, teacher, and studio musician. Here is a little secret: He serves in the role as an international clinician for Mapex drums, Paiste Cymbals and held the record for world’s fastest drummer between 2006 and 2007.
Rees grew up in London, England and currently resides in Miami, Florida. When not at work, he enjoys spending time with family and friends, traveling, and indulging in his passions for music and creative pursuits.