Financial planning is the process of establishing how an individual can meet life and estate planning goals by proper management of assets.
Below is not an all-encompassing list but is intended to outline the major aspects of financial planning:
- Retirement income planning – How much do you want in retirement?
- What is your projected Social Security Benefit?
- At what age can you take Social Security? Is it taxed?
- When should you take Social Security?
- Do you have a pension? What are the options for your spouse? What strategy are you using?
- Are you saving enough to supplement social security?
- How much does your employer match your 401(k)?
- How are IRA, 401(k), 403(b), & 457 distributions taxed?
- What are required minimum distributions at age 70½?
- Do you have deferred compensation and/or stock options? How are they taxed?
- Investment planning – Answer crucial questions like:
- What is your risk tolerance?
- What are your liquidity needs and time horizon(s)?
- Does your current portfolio allocation match up with your risk tolerance?
- Is your portfolio properly diversified?
- Does your portfolio have overlapping exposure to certain asset classes that you are unaware of?
- What are the transaction costs of your portfolio?
- What are the management fees of your portfolio?
- Is your portfolio tax efficient?
- Tax planning – Explore strategies to minimize the impact of taxes on estate transfer and other current and future transactions. Tax planning is inherent in all aspects of financial planning. This can include but is not limited to:
- Tax loss harvesting
- Tax consequences of property transactions
- Traditional IRA vs Roth IRA. What is Roth IRA conversion?
- College funding – 529 plan vs prepaid tuition
- Charitable/Philanthropic Contributions and Deductions
- Deferred compensation
- Insurance planning – Manage and mitigate the risk of unanticipated, disruptive events.
- Life insurance
- Do I have the proper amount of life insurance?
- Is life insurance expensive?
- What is the difference between term and permanent life insurance?
- What is the favorable tax treatment of life insurance?
- Long-term care insurance
- Can your premiums go up?
- Does your policy cover home health care and assisted living?
- Does your policy strategically allow for certain assets to be excluded from the calculation of Medicaid eligibility?
- Disability insurance
- Short-Term vs Long-Term?
- Is it enough?
- Is the monthly benefit taxed?
- Health insurance
- Employer based vs Individually purchased insurance.
- Do you qualify for a subsidy?
- Medicare insurance
- What is Medicare Part A, B, C & D?
- What is the difference between Medigap Supplements Plans and Medicare Advantage Plans?
- Life insurance
- Business Succession Planning
- Will you be leaving your business to your loved ones?
- Can you begin transferring your business now (freezing the transfer value) and still maintain control and income?
- Are there gift taxes to consider?
- Are non-business owning heirs accounted for fairly?
- Or, do you plan on retiring and selling/gifting your business to a family member?
- Do you need income from your business in retirement?
- What is the most efficient way to do that taking into account current taxes and estate planning?
- Do you have business partners?
- Is there a buy/sell agreement? Is it funded?
- If not and one partner dies unexpectedly; who is your potential new business partner? Is it the surviving spouse and/or multiple children?
- Will you be leaving your business to your loved ones?
- Estate Planning
- Do you have an illiquid estate?
- Are your assets properly titled?
- Are your beneficiaries up to date?
- Do you have a will?
- Has your financial and/or family dynamic changed?
- When is a testamentary trust or a family limited partnership appropriate?
- Do you have a Durable Power of Attorney for Health Care?
- Do you have children from a previous marriage?
- Do you want your heirs to receive your assets gradually or all at once?
- Do you have a special needs child?
- Do you want to strategically leave money to your grandchildren?
- Will you be leaving money to a charitable organization?
- Cash Flow – Summarize your financial status.
- Explore savings strategies and budgeting.
- Do you have an emergency fund?
- Do you have a mortgage?
- Do you have consumer debt?