Why You Plan

I gave a workshop this week on Basic Financial Planning.  I talked about the foundations of a financial plan, and discussed some of the concepts and vehicles used in planning for your future.  Among these were Life Insurance, Disability Insurance, Retirement accounts, college savings plans, etc.

A few really good questions came out of the session that I wanted to share.

1.  Do I see lifetime employees or business owners saving more toward retirement? My answer was that I see that lifetime employees are much more likely to save a great amount toward retirement.  There is a kind of forced savings in that their employers usually offer some kind of retirement plan.  Entrepreneurs, on the other hand, tend to put as much of their money as they can back into the business.  While this is good when trying to establish the business, at some point they really need to start taking money out and saving it.  They can no longer count on selling their business to provide for retirement.

The irony is that there are so many more options available to small business owners to put more money away for retirement.  There are SEP, SIMPLE, 401k, 412, Keogh, etc.  The people that have the opportunity to put more away, in a more tax efficient manner, are the ones who aren’t taking advantage.

2.  Are people reluctant to buy insurance or do any planning right now? At first people are usually reluctant to talk to me.  They think I’m going to try to sell them something they don’t think they need.  However, we go through some processes, and talk about their present and future needs.  Almost every time I talk to a client, I ask how they feel about their planning so far.  I always get a grin, and they tell me they feel a sense of relief.  They feel good for doing some planning…for taking some control of their financial future.

3.  Can we stop calling it “retirement?” I’ll attribute this to Erica O’Grady.  She told me she has no intention of retiring, nor do most of her friends.  She’s really right.  So many in our generation aren’t going to go for the old school definition of retirement.  We’re not going to stop working completely, buy a condo, travel the country in an RV, etc.  We’re going to keep working, keep volunteering, keep active.  However, we need to make sure we’ve planned enough that we don’t HAVE TO work.  We’ll work because we want to.  That way, if we want to work on writing a novel, or fixing up cars, or running a non-profit, we can do so.

As per Erica’s suggestion, I’m going to start referring to it as Lifestyle Freedom.  Thanks Erica.

Thank you to those that attended and had great questions.

Advertisements

0 Responses to “Why You Plan”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s





%d bloggers like this: