Serving Clients in Knox, Blount, Anderson, Loudon, Sevier & Roane Counties

Comprehensive Financial Planning

Will $1 million dollars be enough for your retirement? Many folks would like to think so, or hope so. Well, before nodding your head in agreement, what’s your budget like? $50k a year, $100k a year, or more?

To make it a simple: If you spend $50k a year, that million-dollar savings may last only 20 years. If you spend $100k or more a year, well, you get the picture. Keep in mind, the budget may not even include the ever escalating healthcare cost in the retirement, and/or the long-term care expenses.

So, how do you know you will have a successful retirement? Well-thought and guided comprehensive financing planning is a must.

By learning your goals, cash flow, existing financial assets, and future retirement income, your planner can help you discover where you are now financially, where you want to be, and map out a plan to get you there in a most efficient manner. Since most people’s financial life consists of 7 areas of planning — cash management, college planning, estate planning, investment planning, risk management, retirement planning, and tax management — the process of investment planning or portfolio management only represents 1/7 of the overall financial planning. Thus, focus on investment alone would greatly underestimate your success for retirement. Moreover, every financial decision you make in one area may affect the other six areas as well.

Cash Management

Believe it or not, cash management is the heart & soul for your current or future retirement planning. The computation for retirement is actually a reversed calculation process. In other words, financial planners need to know how much you spend prior to the retirement in order to estimate how much you need to save.

The process is analogous to first inputting your destination in a GPS before driving towards it. This cash flow analysis alone can be a wake-up call as many folks are keenly aware of their income but few track their expenditures. The upshots: it could skew people’s “mental accounting” for a glowing picture of having more money than they really do and resulting in some missing opportunities for savings and investing.

College Planning

Given the daily headlines of the growing student loan debts, parents want to save for kids, but often choose the wrong vehicle to save, which potentially achieves the exact opposite result. Parents may not only unintentionally jeopardize the opportunity to get the much needed scholarship or grants, but also they could inadvertently give an expensive gift to the financially unready kids. Ferrari, anyone?

Estate Planning

Estate planning should ideally start as soon as a person turns 18. Having the basic estate planning documents (Will, Durable POA for finance and health, and the Living Will) done gives you the peace of mind. Without those legal documents, your loved ones are in the dark & can’t help you even if they desperately want them to.

Investment Planning

Investment planning is more than just buy and sell securities. Nowadays, even robots can do that. What makes a human advisor irreplaceable is our knowledge to interpret and help adjust the new laws/regulations to your advantages. Furthermore, financial planners can help you match the right financial tools to meet your unique needs.

Risk Management

Insurance is our way to partner up with insurance companies to transfer the unexpected risk and share the exorbitant cost. Most Americans have no qualms for home and auto insurance even though they are good drivers or their house may never catch on fire. But, why the hesitation for the long-term care? The odds are clearly against anyone who lives pass 65 — three out of four will be using LTC. Failure to plan and act upon the recommendations for LTC can be your Achilles’ heel for financial ruin.

Retirement Planning and Tax Management

Retirement planning and tax management are almost hand-in-hand. According to the American College RICP curriculum, do you know 68% of the retirees who receive the social security benefits don’t pay any tax? 16% will pay tax no matter what they do because they are in the high-income tax bracket, but the remaining 16% population can minimize the tax just like the other 68% if they do some proactive planning. What’s more — once your Adjusted Gross Income (AGI) is high, not only a portion of your social security benefits (up to 85%) are subject to tax, your premiums to Medicare Part B and D also increase.

To summarize, having a comprehensive financial plan done is similar to getting your comprehensive blood work done when you first visit your primary doctor. Subsequently, any enzyme levels deviate from your initial normal level would indicate a further study and analysis. It’s the same with your comprehensive financial plan. Without the initial plan, one is clueless on the progress or missing opportunity.

Thus, a comprehensive financial planning provides a clear picture of your current financial profile, and it aids the planner tremendously to strategize and offer guidance for your future. Moreover, the planning should be adjusted and evolved with you as your goals and financial status change.