Financial Planning is a process, and at it’s core, one that is ongoing. At One Wealth Advisors, our aim is to develop financial plans for clients with the notion that the plan becomes the baseline for decision making moving forward. However, financial plans, more often than not, evolve into something that look vastly different – 5, 10 even 20 years down the road. Circumstances change – careers change, income rises, we get older, children are born, grow up, go to college etc., etc. Hence, that baseline financial plan should reflect those dynamics, embodying what we like to call a “living – breathing” document. And much like our “living-breathing” bodies, the plan should be given a regular “check-up”.
We suggest a financial “check-up” at least annually, but perhaps semi-annually or quarterly, depending on the complexity and/or fluidity of your situation and as major life changes occur. Furthermore, much like a physical – where a doctor draws blood for analysis, has a look in your ears, listens to your heartbeat and breathing, or depending on your age possibly a few other less pleasant things, we examine the various financial systems at work: investment allocation; risk management; retirement plans; estate plans; taxation; and how any life changes might impact each of these “systems”; how these systems consequently may impact one another and most importantly; how they impact our chances of achieving all of your financial goals. Because much like the human body’s systems work in concert, so do the different systems at work in our financial lives.
Even if it feels like nothing has changed on your end and you feel terrific (which is an often used excuse for avoiding the doctor), the external environment may change. A prime example – the CARES act 2.0 increased the maximum salary deferral to 401Ks to $22,500 and raised the Required Minimum Distribution (RMD) age for retirement accounts to 73 just recently (among a few other things). A plan review is essential to be certain you continue on the right path financially and never veer too far off course. Remember, an ounce of prevention equals a pound of cure.