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By Brian Harrigan and Robert A. Price
With any journey, a well-stocked bag of goods, a map and a budget will make the going easier. The same goes for financial planning. Are you prepared through smart planning for your life’s financial journey?
In a 2015 Northwestern Mutual study, 58 percent of Americans believe their financial planning efforts need improvement. But 34 percent of us have done nothing to plan for our financial futures. “There is a deep disconnect between what Americans know they should do when it comes to finances and what they are actually doing,” the study said. The financial services company’s study also stated 21 percent of Americans are not confident with their future financial goals. And with so much financial information available, it’s as if many are stuck on the roadside waiting for help.
It doesn’t matter whether you are a young couple, business owner, executive, teacher or public employee, financial planners want to help their clients reach specific longer-term financial goals through traditional or innovative investment vehicles or products – and achieve their dreams as well. When planning a financial future, most follow a traditional route of a 401K, Roth IRA or a tax-sheltered annuity, but expect different results. We at Executive Plan Design constantly see traditional financial planning having potential “road hazards.” The top five planning concerns are:

  • Life insurance for death protection and income replacement buying only term insurance. (The problem with this is the insurance isn’t there down the road after the term period ends – the insurability/affordability isn’t guaranteed if it still is needed. There are better alternatives to term insurance, since 97 percent of term policies aren’t in force at a person’s time of death.)
  • 401Ks and IRAs as tax deductions which use volatile investments to plan retirement income later in life. (The problem with this is that clients grow money for themselves, but also for the government, with limited flexibility/control. With our nation nearly $20 trillion in debt, these plans will be hit with significant tax increases. The IRS will force clients to liquidate their accounts before death with required minimum distributions, taxing all the growth and money invested.)
  • 529 Plan to address college costs for children. (The problem with this is that if the child gets a scholarship, the 529 plan doesn’t allow the funds to be used for retirement without taxes. In addition, penalties are applied if taken before age 59.5.)
  • Brokerage accounts: Mutual funds investments for accumulation. (The problem with this is the investor may receive a tax bill even when the net account value goes down because some underlying stocks had gains and were sold.)
  • Long-term care: 70 percent percent of people turning 65 will need long-term care before death. (The problem with this is qualifying for coverage and with the affordability of paying premiums for coverage never used.)

The good news is that today there are financial plans available to address these issues efficiently and with more flexibility. Executive Plan Design suggests strategic planning. That way, hard-working folks can establish an insured life-time plan including phenomenal sights such as: growing money tax deferred, providing for college and retirement with tax free income and securing long-term care. Your financial journey can be flawless and with an estimated time of arrival that will be spectacular.
Instead of using an old map to get to your future financial destination, get innovative and use a “GPS” – great planning supplements. You’ll find educating yourself with solid financial mechanics is a wise endeavor. If you don’t know what’s under the hood of your financial vehicle, it can hurt you. Better planning today means enjoying your tomorrows more. And most of all, you and your loved ones will enjoy a smooth ride for years to come.