By now, you've learned what financial planning is, you have your documents ready and you've found a certified planner. Chris Otto from Bankoh Investment Services, Inc., a non-bank subsidiary of Bank of Hawaii will talk about how to build a goals-based financial plan.
In building a financial plan, you won't know how much it will cost until you decide where to go and what you will do there. Building a goals-based plan starts with identifying your unique goals and aspirations, and working on a plan to make sure you can do those things. Start with your vision of retirement, and work backwards to quantify how much it will cost to support that vision.
For a comfortable retirement, you certainly must be able to pay your basic living expenses. But a truly satisfying retirement lifestyle will also include money for other purchases and activities beyond your basic needs. That's what makes retirement fun. Jot down the “needs” you must have, “wants” you'd like to have, and even “wishes” you dream about. Your vision can include travel, college, home improvement, celebrations, major purchases, leaving a legacy, or charity.
After identifying your goals, a planner will gather information about resources you will use to fund those goals. These may include current investments, savings, and retirement income. Your planner can provide actionable steps to get you closer to where you want to be.
Remember that a Financial Plan is a living document, so update your plan annually, or as your life changes. The true power of your plan doesn't come from doing it once and forgetting it. Planning is an ongoing process. Your plan should be reviewed and updated at least once a year, and more often if your goals change significantly. A regular update is the best way to put current events in perspective.
Next week we'll talk about financial planning for millennials.
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