Can You Manage Today’s Demands and Still Plan For Retirement?
Many people begin their journey to retirement with a retirement savings plan – either with their employer or in a SEP or Traditional IRA. When children come along, they may consider buying term life insurance to protect their new family. If an elderly loved one develops a disabling illness, they might wonder about some kind of protection from long term care costs. Regardless of the worries of today, laying out the full picture of your current retirement plan leads you to a better understanding of how to strengthen it.
That’s what completing a Retirement Analyzer review can do for you. By filling out the information with specific details about the assets, investments and insurance you have today, you build a robust view of where you are now. Using the projection tools, you can see how your plan might work out over the years. You can adjust the numbers to test out different approaches. Armed with this data, decisions about your next steps become clearer. You can more easily decide between various choices to balance your current needs with your long term plans. Even better, as each life stage comes along you can review your plan, update any changes and use the information to determine if it’s time to make adjustments.
Looking for an Immediate Financial Win
Recently, I received a call from a young couple getting serious about starting a family. They told me they suddenly found themselves worried about making sure their family would be okay if one of them died early. They wondered how to make sure the surviving spouse could stay in their home and afford care for their young children. Although it seemed like a simple fix – buy term life insurance for each of them to help cover income loss – the reality was they weren’t ready to make a decision. They didn’t have a clear picture of their finances and weren’t sure how much insurance they would need.Building a Long Game – a Long Term Financial Plan
To guide them through the maze of sometimes conflicting goals, we needed a complete picture of all the key factors competing for their dollars along with their financial priorities for the short term as well as for the long haul.Our next steps:
- Collect financial information and meet to enter it into the Retirement Analyzer.
- Create a list of short term and long term goals and what assets they need to get there.
- Meet to review their current financial picture and compare to their goals.
- Possibly run some scenarios on how different adjustments to their plans might affect what assets are available in the future.
- Choose the life insurance plan that protects their new family while building towards their future goals.
In this case, both spouses are self-employed and, although they have some emergency savings, they haven’t yet started retirement savings plans. Thanks to their Financial Analyzer report, they learn that their budget will be pretty tight once the first child arrives. That means they will only have money to either buy life insurance or start saving for the future. Protecting their new family is top priority for them. Because they’ll need a lot of money right away if one of them passes away, an indexed universal life plan for each of them may make the most sense. It allows them to grow cash in the life insurance plan, offers a large amount of cash quickly at death, and they only pay a single set amount for each of them. Buying insurance won’t cure their new parent nerves, but sure will offer some peace of mind about the future.