Sean Kelly
The Kelly Agency
Is Financial Planning Different Than Retirement Planning
Financial Planning vs. Retirement Planning: What You Need to Know
When we talk about our financial futures, two terms frequently emerge: financial planning and retirement planning. But are they the same thing? In short, no. Each plays a distinct role in securing our financial futures, and it's crucial to understand their differences.
Financial Planning: This focuses on the accumulation phase during our working years. Its main goal? Ensuring we set a realistic target for the savings we'll need when we stop working. Financial planning helps guide our saving and investing habits by calculating how much we might need post-retirement. It's most beneficial during our prime earning years.
Retirement Planning: Think of this as the plan for how your money will work for you once you're no longer working. This strategy is about replacing your paycheck and figuring out how your assets may create a steady income that will last your entire retirement. It's more intricate than financial planning because it's not just about accumulating money but making it last.
In professional practice, the starting point is recognizing your income sources – from work, Social Security, pensions, or other avenues. You get a clearer picture of your retirement outlook by pinpointing assets that may be transformed into steady income.
But retirement planning doesn't stop there. It's essential also to be aware of potential risks in retirement. These include:
- Longevity risk – outliving your savings.
- Inflation risk – reduced purchasing power of your money.
- Healthcare and long-term care risks – the costs of medical care and support.
- Investment and reinvestment risks – fluctuations in returns on your investments.
- Public policy changes – alterations in governmental policies that might affect retirees.
- Unexpected financial responsibilities.
- Loss of spouse – the financial implications of losing a partner.
- Financial Planning: Focuses on the accumulation phase during working years.
- Retirement Planning: Centers on generating a consistent income post-retirement.
- Retirement planning assesses various risks, including longevity, inflation, and healthcare.
- Choosing the right age for claiming Social Security is crucial.
- A steady income in retirement, such as from annuities, may contribute to happiness and security.
- Having a detailed retirement financial plan can alleviate stress and enhance retirement enjoyment.
Sean Kelly
The Kelly Agency
1902 Ridge Road
Suite 121
West Seneca, New York 14224
sean@kellyagency.org
(716) 603-6851
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