Your financial strategy should never be something you set once and forget about until you need it in retirement. Instead, it’s much more effective to work with financial advisors and professionals who check in on your progress and plan through detailed financial reviews at regular intervals.
A financial review can ensure that your goals are on track, both in the short term and the long term. Before you can plan for a long and financially secure retirement, here are some pieces that your advisor and the rest of the team can measure to project the likelihood of success.
Better yet, you can start checking in on these markers right away so you don’t lose any more valuable time maintaining an outdated status quo with your fingers crossed, hoping for the best.
Establish a Mindset for Success
Regular check-ins on your financial health help you establish a mindset for success. Even without diving into the nitty-gritty details, simply staying abreast of your general financial situation helps you understand where you stand and establish autonomy over your finances.
Let’s say you have a monthly subscription you never use. A regular review of your finances would help you catch that subscription early and cancel it before it sucks months or even years of payments from your account. When you apply that same logic to investments, employee benefits, and retirement savings, you can benefit even more from quick, informed pivoting.
Setting your finances to autopilot and forgetting all about it may be nice and easy, but it’s far from effective. Meanwhile, proactive financial tracking and involvement are better for your portfolio and help build your financial confidence. Target date funds are easy, but they are a fund of funds, which means another level of expenses.
Knowing that you will meet with your financial planner also helps set up accountability for disciplined saving practices. Enter each meeting scheduled with an open mind, ready to be educated on the benefits and potential outcomes of each money move.
Measure Actual vs Expected Progress
It can be tempting to assume that the plan you set in motion years ago is still moving smoothly. But lots of things can change if you never revisit the structure of your plan: changes to the economy, your income, and even the tax code can all alter your projections.
This is why measuring your actual progress matters.
Identify potential issues earlier on with a look at your current trends and projections. The cost of ignoring your existing situation could be dire. If it takes years to realize that you’re off track, the damage may have already been done, making it difficult to recover for that financially secure retirement you wanted.
Optimize Tax and Legal Strategies
As you measure your expected progress, this is also a good time to check in with the tax and legal professionals on your team. Tax laws and estate regulations are modified from time to time. While they may not always have a deep and lasting impact on your portfolio and estate, they could. And it would be better to know now and adjust than to hope for tax laws to revert.
Changes to the law may actually be a benefit to your portfolio with a few minor changes. Experts can often modify your long-term strategy so that these alterations make minimal impact and do not require an entire overhaul of the plan.
Adapt to Unplanned Life Events
Anticipating every possible change that could take place over the next few decades is impossible. You can do your best to insulate your portfolio from the shock of some changes, but there will always be events that you never saw coming. How you adapt to these unplanned life events will serve as a foundation for your financial future.
Many people think only about the more negative unplanned life events, like a divorce, aging parents, a failed business venture, or declining health. But not every change that can alter your course is negative.
For example, a significant promotion could change your financial trajectory for the better. Revisiting your financial plan might reveal that an early retirement is on the table. Marriage or the birth of a child are also exciting life events that could affect your plan. These might signal that it’s time to revisit your estate plan or look into 529 plans for a child’s or grandchild’s future education.
Rebalance Your Investment Portfolio
When you initially set up your portfolio, your financial advisor probably helped you diversify your holdings between a variety of assets. Over time, you might find that your portfolio has skewed in a particular direction where you’ve doubled down on successful investments.
Regular financial reviews are a fantastic time to consider your overall portfolio. It may be time to rebalance according to current economic trends and forecasts. Are your holdings clustered in one sector? If you receive equity compensation from your employer, have you taken appropriate steps to avoid concentration risk?
Often, a portfolio requires a minor tweak here and there over the long term.
Recalibrate Based on Market Conditions
Nothing about the economy remains the same for long, especially not when thinking about the horizon of your retirement savings.
Regular financial reviews help you adapt to the daily changes influencing affordability. Namely, how much has inflation changed since your first estimate? Depending on the answer, you may need to change your plan accordingly.
Planning your retirement for a bear or a bull market based on your unique situation will be crucial. Strategize with your financial planner to see which one makes the most sense for your portfolio so that your investments are protected as much as possible against shifting economic trends.
Schedule Your Next Financial Review with Magellan
Are your goals and retirement plans on track? If it has been some time since your plan has been assessed by a professional financial, tax, or legal advisor, let Magellan show you how easy it can be to prepare for your financial future. Our team integrates all of the services you need under a single roof so that you have a seamless and comprehensive assessment of your plan.
Let us review your unique situation and offer strategic advice on how to reach your goals. Reach out to us today to schedule your consultation with our experienced team!
For a comprehensive review of your personal situation, always consult with a tax or legal advisor.
This material provided by Kevin Meaders was written by Axle Eight, a non-affiliate of Magellan Planning Group.