Is it time to Re-evaluate your Financial Plan?

By
Jeff Motske, CFP®
February 14, 2022
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Re-evaluating your plan and re-evaluating your opportunities is really important. According to Northwestern's 2020 Planning and progress study, 71% of Americans feel their financial plan could use some improvement. So maybe you have a plan, but you're saying, “Maybe I can use some improvement”. At Trilogy Financial we look at the work that's been done in the past. Remember that we're not judging what was done in the past, but we'll look at that and say, is there any way that we can make improvements upon what's been done in the past to help you plan for the future. Understanding that is really important. A plan is not static, it's a living, breathing document, and you want to make sure that you're updating and reevaluating your opportunities on a regular basis.

Another thing to think about is interest rates is we don't know what's going to be in the future. I think this is an interesting one as well. Many Americans for 2020 stayed at home a lot and a lot of them spent less money. Matter of fact, Northwestern Mutual did a study for 2020 on average, people say it's about 10% more money in their personal savings than they did in 2019. Well, why didn't they spend? Some of it was lifestyle – they didn't go out to dinner as much; they didn't go on their vacations- there’s a lot of things that were held back due to all the craziness that had gone on. But there were people that spent on home improvements in other areas as well. People were spending more on their houses because they were living in their houses more. There's a lot of people that saved more or in that period. You might want to evaluate what to do with that savings. Maybe that's the first step in building out a financial plan. Maybe that's the money that should be put towards the college plan. Maybe that's the money that should be put towards lowering your debt overall. Maybe that's money that you should use to increase your path to financial independence. Re-evaluating your opportunities, your long-term financial plan.

I would highly encourage you to re-evaluate those opportunities again. At Trilogy Financial, we do that all the time. We look at current plans and make sure they make sense. Then when you have extra money that's saved, we look at is it working hard for you and is it working hard for your financial why. Maybe you're in a place where you can refinance. Saving money, and refinancing is another really good tool to help create more cash flow and help you get on that path to financial independence.

I'm big on this thing called Financial date nights. Earlier, I talked about the fact that people argue about money, financial date nights once a month, get out of the house, go do something different. I've had people do financial date drives that live in big cities – go have a cup of coffee, have dinner, whatever it is. Get out of the house and talk about your financial whys, talk about your planning, and talk about your goals. Don't argue about them. This is an opportunity for big picture, global type discussions within the couple and then work through those things. And when you need help and more clarity, that's where a financial advisor can really jump in and help you jump-start whatever is going on in your financial plan.

Another thing is to be flexible and willing to adapt. I said this earlier but good financial plans are living breathing documents. In regard to this, all of our clients at Trilogy Financial have their own portal. Inside that financial portal is their financial plan that updates on a regular basis. We can put paperwork in there or documents in there and it's something that's living and breathing. You may need to be flexible with what's going on in your world. Timeframes constantly are getting adjusted. We've had people come in and say, “You know what? I'm thinking about retiring early” or “My companies offering me an early retirement package.”, or “I have to work a little bit longer” for whatever reason. That's just something you update in the plan. College scenarios too. Some kids are deferring going to college and I don't blame them. You didn't pay for online college, and you may want the experience. If that’s the case, you’d go in a different direction. Whatever those things are, be willing, flexible, and adjustable and in communication with your spouse, your partner, or business partner.

Meet and talk with your financial advisor regularly. They should be asking you those questions and they will be updating you on the markets and current events. what I would say are the unknowns or the instability side. The other thing about having that advisor is that joyful accountability. Have an advisor, have a coach, have a financial team – they'll help you stay accountable to do what you say. They're not going to be bugging you, they're going to be reminding you of the good things that you've said during those planning discussions. They're going to be reminding you where you are and they're also going to be praising you when you're doing what you said you were going to do. And when you do that, you make great progress, and when you make great progress, then the plan progresses year after year after year.

How much closer are we to financial independence, that's the conversations that happen over time. So, take action on what you can do, be in control of your knowns, and plan for the unknowns. Again, insurance is a great thing for that. Work with your advisor on the unknown, so you have less anxiety. Be flexible and will be willing to adapt and remember the financial planning documents and plans are living, breathing documents. Life happens, life events happen, and you've got to plan for those things. If you're not working with a trust or a financial advisor investment fiduciary, look to find one that can help you build your own personal plan.

 

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By
David McDonough
March 28, 2023

Financial planning involves thoughtfully outlining objectives and setting goals in your Life Plan. With anything, the possibility of running into obstacles, options, and challenges throughout your financial journey is unavoidable. That’s why it is important to implement some sort of checks and balances to mitigate these challenges. Insurance is one of the best ways to account for unforeseen conditions and events in your financial plan. The thought of utilizing insurance can be daunting. It makes the possibility of losing your car or home due to an accident, flood, or fire a reality. That’s exactly why we create a financial plan – to be prepared for the unexpected. Our team is committed to coaching you through the process, so that you can make an informed and confident decision. There are various types of insurance services available that your Trilogy Financial advisor can help you navigate so you can handle the many uncertainties that life throws your way.

Read on to discover these insurance services.

Insurance Services Provided by Trilogy Financial

Every Trilogy Financial Advisor is committed to helping you build the legacy you have always desired to leave through the following services:

Term Insurance

A term insurance policy is the most common form of temporary life insurance. The term usually lasts for a specific “term” of years. Term insurance is also a form of insurance that is rented. Meaning, you pay a monthly premium for the insurance, but it expires after the allotted time frame. The duration can range from five to thirty years.

Term insurance protects liabilities that will cease to exist after a specific period, such as providing extra cashflow for raising children. It is a simple life insurance plan that protects against the possibility of an untimely death. A death benefit is granted if the insured passes away during the policy's stated tenure.

Because death is unpredictable, term insurance plans are essential. The family may experience a significant financial loss if the family's primary provider passes away. A term plan covers the loss. It benefits the family, allowing them to cover lifestyle costs and continue to address their financial objectives.

Permanent Insurance

Permanent insurance can be considered “owning” insurance coverage. Like term insurance, you pay a monthly premium; however, in permanent insurance, the range is continuous and does not end within a time frame.

For instance, even after your children have moved out and your liabilities have diminished, you may continue to carry some form of insurance to cover your loved ones and compensate for your end-of-life needs.

Permanent insurance premiums are more significant than term insurance premiums because, unlike term insurance, the insurance company may never have to pay out the policy. Permanent insurance can be used as an income and an insurance tool. Both a death benefit and a cash value factor are included. You can access the money as the value increases by taking out a loan or a withdrawal, and you can terminate the insurance by withdrawing the cash value.

Long-Term Care Planning

Long-term care planning, at its foundation, entails ensuring that you or a loved one's needs are adequately met when they can no longer care for themselves. Therefore, as you age, having a practical plan becomes more and more crucial. While many maintain their independence well into their senior years, it never hurts to plan.

Any long-term financial plan should consider long-term care costs, especially if you are in your 50s or older. You are unlikely to qualify for long-term care insurance if you already have a disabling condition. Most over 75 applicants will not be accepted by long-term care insurance providers. Most persons who purchase long-term care insurance do so between 50 and 60.

Risk Management

Risk management entails recognizing, assessing and managing risk. A well-executed risk management program is built on a foundation of standardized risk assessments to assist businesses in prioritizing their risk based on its potential impact. This procedure will inevitably reveal hazards affecting the company's fundamental competencies.

As financial Advisors, it is a part of our job to help you navigate your financial well-being, which includes helping you mitigating certain risks. Identifying your risk factors is your first defense, followed by avoiding or limiting risks to your income and survivors. Insurance is your quality line of defense.

Importance of Insurance in Financial Planning

Here are some factors that make insurance an essential aspect of your Life Plan:

  • Financial assurance: You feel safe knowing that the insurance policy will cover the damages in the event of an emergency.
  • Tax advantages: Insurance lowers your taxable income and provides financial benefits.1
  • Risk protection: Insurance prepares you to deal with any financial loss you might suffer in the event of an unplanned circumstance.
  • Meeting your prerequisites: Several insurance policies are available to cover the various risks you can encounter.
  • Peace of mind: Insurance plans assure you that your funds will not be compromised in the event of an emergency.

*This information is not intended as authoritative guidance or tax advice.  You should consult with your tax advisor for guidance on your specific situation.

Why Choose Trilogy Financial

Your financial plan should be strategically in line with your insurance. Our Trilogy Financial Advisors use a comprehensive strategy to offer insurance policies tailored to your specific needs and Life Plan. We understand the risks you face and how to help improve your financial life. Our Advisors will work with you to develop a deeper understanding of your alternatives, pinpoint practical needs and make plans for the care you and your family deserve.

To help you build the life you’ve dreamed, we collaborate with the most reliable insurance firms with a track record of being financial secure and capable of paying claims.

Get Started with a Financial Advisor Today

Everyone has a distinct level of risk, and before purchasing insurance, it is critical to identify risks and establish how to limit the likelihood of them occurring. We understand that everyone has a varying level of comfort and experience in navigating finances and Life Plans. That’s why our Advisors are committed to being both a partner and coach to support you as much or as little as you need, so you can make the best decisions for you and your family.

At Trilogy Financial, our Advisors will guide you through your daily financial decisions to keep you on track and set you up for your real-life goals. If you have any questions concerning insurance or any other element of your financial life, get in touch or visit our website today to book a meeting with an advisor

 

happily discussing insurance plan after meeting with financial advisor
 

 

By
Mike Loo, MBA
June 13, 2018

Retirement is one of life’s most significant milestones. Not surprisingly, it’s both an exciting and worrisome prospect for many Americans nearing those Golden Years. According to a 2016 Gallup poll, 64% of Americans are worried about not having enough for retirement, 51% worry they won’t be able to maintain the standard of living they enjoy, and 60% are concerned they won’t be able to pay the medical costs of a severe illness or accident. One of the best ways to alleviate uncertainty is planning ahead.

What Will I Do with My Time and With Whom Will I Spend it?

Just as you would plan for the financial elements of your retirement, it’s equally important to plan how you will live out your retirement years. One of the biggest decisions you will make when you retire is where you will live. For example, maybe you want to live near your children part of the year and vacation a portion of the year somewhere else. Or perhaps you can’t imagine leaving the home you’ve spent years building and improving. Your housing will affect your finances, spending, and daily activities.

Next, address how you will spend your time. No one entirely escapes a daily schedule. Your daily retirement schedule doesn’t have to confine you, but it will help you fill your day and plan ahead. Start by establishing a balance of short, medium, and long-term goals. Short-term goals could include cleaning up the house, going to the gym, planting a vegetable garden, taking a vacation, or visiting family. Medium-term goals may be redesigning your yard, remodeling your home, taking a class, or planning for an extended vacation abroad. Long-term goals could be learning a foreign language, mastering a musical instrument, obtaining a new degree or certificate, writing a book, or building a vacation home. Whichever goals you define, the idea is to identify an extensive list of options so you can stay busy, maintain some control of your daily schedule, and have different activities to which you can look forward. Additionally, consider with whom you will be spending your time and enjoying these activities. If you and your spouse are not used to spending a lot of time together, know that there may be an adjustment period as this newly found together time can create tension in your relationship that hasn’t existed in the past.

How Much Will I Need in Retirement?

While it will differ for everyone, research from Fidelity shows that most people need to replace between 55% and 80% of their pre-retirement, pre-tax income after they stop working, to maintain their current lifestyle. After working hard throughout your career to save for retirement, now comes the critical decision of determining how much you can safely withdraw to replace your income while still having enough to last through your retirement. When taking withdrawals from your portfolio during retirement to pay for expenses, there is a risk that the rate of withdrawals will deplete the portfolio before you reach the end of retirement. Since you may know that stocks have historically earned an average of 8% a year, you may erroneously assume that you can afford to withdraw 8% of the initial portfolio value each year, plus a little more for inflation. However, 8% is an average, and while in some years, the numbers may be higher, in others, they will also be lower – and in some years, much lower. To protect yourself from the uncertainty of the market, you may want to consider limiting your withdrawals to 3 or 4% initially.

Ultimately, choosing a withdrawal rate means weighing your desire for increased spending in relation to your willingness to reduce spending. This relies partly on your attitude towards spending, and partly on your risk capacity. If you have Social Security and a substantial pension that is payable for life, then you have more capacity for risk in taking withdrawals from your portfolio. If not, you may need to reexamine your goals and expense categories to make sure they line up with the funds you have available.

Which Retirement Fears Could Prevent Me From Retiring?

A Retirement can be both exciting and terrifying for some people, as it’s such a significant transition in one’s life. As you plan for your retirement, it’s important to consider any fears you have that may prevent you from retiring. Through working with my clients, I’ve found there are a few common fears. First, some who have spent so many years dedicated to their career may fear they’ll lose their identity. Often, lawyers, doctors, teachers and other professionals may wonder what their purpose is if they’re no longer serving others. This is where it’s essential to return to the first question here and identify how you can find meaning in your new schedule. Second, many worry they could run out of money. While it’s impossible to predict the exact amount of money you will need, a financial plan can provide a roadmap that gives you probabilities of how long your money can last. Working with an advisor to review different scenarios may offer you more confidence. Lastly, another common fear is high taxes. While there’s no avoiding Uncle Sam, there are legal ways to mitigate your tax burden and make the most of your earnings. Consult with a tax advisor to give you an idea of how much of your withdrawals you’ll take home versus paying in taxes.

How Will I Address the Issue of Long-Term Care?

While some expenses go down once you retire, others can increase, such as healthcare costs. On average, a couple both age 65 can expect to spend between $157,000 and $392,000 on healthcare costs alone throughout their retirement years — a 29% increase over the past 10 years. This estimate assumes enrollment in Medicare health coverage but doesn’t include the potential added expenses of a nursing home or long-term care that a retiree may require. Long-term care insurance covers the cost of services that include a variety of tasks you may need help with as you age. For the past 20 years that long-term care insurance has been available, cost was the most significant hurdle for most people. Today’s long-term care policies offer more flexibility and benefits than in the past, and there are now more options and affordable choices that are designed to fit almost any budget. The most well-known option is a standard long-term care insurance policy, where you pay a premium in exchange for the ability to receive benefits if you need them. This is a “use it or lose it” policy, so won’t receive any benefits or money back if you don’t end up needing longterm care. If you don’t like the idea of a “use it or lose it” policy, you may consider a hybrid product, such as buying a life insurance policy with a long-term care rider. With this type of policy, you invest in a standard cash value life insurance policy and select your long-term care coverage terms in the rider. If you end up requiring long-term care, there are available funds. If you don’t need long-term care or if you don’t spend the total benefits available, your beneficiaries receive a death benefit payout upon your death.

Next Steps

Taking the first steps for retirement planning can be overwhelming, but you don’t have to face it alone. An advisor can help you create a personalized retirement roadmap, work, through various retirement scenarios, and help you identify what you will do during retirement to make the transition less stressful. As an advisor who works closely with many couples and families, I want to help you address your retirement questions and feel confident about your future. Take the first step by reaching out to me for a complimentary consultation by calling (949) 221-8105 x 2128 or emailing michael.loo@trilogyfs.com.

Get Started on Your Financial Life Plan Today