The coronavirus lockdowns provided somewhat of a time-out to sit and ponder priorities. You might be reassessing personal goals and aligning them with your financial goals more than ever. The COVID pandemic has changed perspectives on financial planning aims for many families. Is yours one of them?
Traditional financial strategies geared towards investments, 401(k)s, and purchasing homes have been discarded for various new outlooks. Let’s explore.
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Changes in Financial and Personal Perspectives
Almost all aspects of life have been altered, especially in investment planning. While some have lost their jobs, others have lost loved ones. Investment advisors are helping people reinvent themselves through creative wealth management planning processes.
Maintaining an appropriate work-life balance has been advocated for years, but frequently this advice was ignored in favor of higher salaries and better titles. As egos have been checked, most business planning efforts and business owners have been humbled.
In 2020, a significant portion of the working population was forced to work from home for an extended period. Businesses have allowed employees to continue working from home in some cases, while other companies have reopened their office doors.
One benefit of working from home was the removal of the office commute, which allowed you to engage in other activities, such as spending more time with your families, working out, and cooking healthier meals. What was it like for you?
To balance work and life, you might go on more daily walks or read books. While others binged on Netflix, maybe you get more sleep and spend quality time with those that matter most.
Have you found this peaceful balance while still fulfilling obligations? Adaptation was the element of success for 2020 and 2021.
A significant proportion of the working population opted to leave positions in favor of other opportunities. Workers left jobs in droves during 2021, in a phenomenon dubbed the “Great Resignation.”
Some moved to other positions in the same industry with better benefits or salaries, while others questioned working full-time.
In many cases, workers who left their jobs began their own companies. If you’re a new small business owner, securing a knowledgeable financial advisor for entrepreneurs is especially important.
Entrepreneurs cannot be expected to know the ins and outs of every decision they make. You understand that a wise entrepreneur knows to hire those who do what they do best. Having a trusted financial advisor on board can assist you in making the right choices for the future of your business.
Another area that saw a significant shift in mindset was retirement. Some industries laid off thousands of workers to keep businesses afloat. This approach was prevalent in the airline, hospitality, and tourism industries. Older employees considered opting for early retirement, which required adjusting their financial plans.
Tapping into retirement plans early usually comes with penalties; financial experts advise against this. A TD Ameritrade survey showed that 44% of ages 40 to 79 have taken money out of a retirement plan. While 46% of people 40 to 49 have done so, and 53% for people 70 to 79.
Another study shows the other end of the spectrum, with 81% of US citizens shifting assets in preparation for living longer than previous generations by reducing expenses, buying secured life insurance, and maximizing contributions to retirement plans.
Wealth Transfer to Family
Older Americans found themselves concerned about their mortality. Witnessing the number of lives lost during the pandemic and wanting an estate plan in place was wise. A wealth transfer plan is essential for ensuring the smooth transfer of your assets to beneficiaries.
Downsizing and Vacation Homes
While working individuals have long desired vacation homes, the pandemic initially resulted in a downturn for the vacation home market. Rather than working full-time to afford two homes, many individuals found downsizing and renting homes during a vacation a more affordable and reasonable option during a break.
Healthcare — Immediate and Long-Term
While usually acquired through employment or the Affordable Care Act marketplace, healthcare is a significant concern.
Many employers moved away from traditional health care plans in favor of high deductible options. These higher deductible plans came at a steep cost to employees, especially if they required hospitalization due to COVID.
The Uncertain Financial Climate
Financial markets have acted with great uncertainty since the beginning of the pandemic. Initially, stock prices dropped steeply, at a rate unseen since the World Trade Center attacks in 2001. Billions of dollars were wiped from investment portfolios. Many who intended to retire in 2020 had to rethink their plans.
In 2021, the stock market primarily recovered, and gains grew to new heights. Alternative investments such as cryptocurrency, real estate, and hedge funds gained new traction. Bitcoin alone jumped from a low of $5,000 in March 2020 to over $63,000 in November 2021.
Worries about the Omicron variant of COVID and fears of a war in Eastern Europe have led the traditional stock and alternative investment markets to change daily since the beginning of 2022.
It’s no longer enough to manage your investment portfolio based on quarterly earnings and shifts — instead, it must be assessed almost daily to ensure wealth protection.
You want to ensure that your investments are protected as much as possible. Having an expert familiar with the ups and downs of the market may make a significant difference in ensuring the security of your assets.
Hiring a Qualified Certified Financial Planner
When selecting a financial planner, don’t go with someone who over-promises. Meet with several different financial planners to find the one who most closely aligns with your values and beliefs. Be sure to avoid a conflict of interests.
Also, ensure that you choose one qualified in the field who can show you examples of their work. Many times, engaging with a certified financial planner (CFP) is the best option. A registered investment adviser will become your best resource very quickly.
A certified financial planner has the knowledge and experience you need to set up the appropriate financial planning strategies with your personal goals in mind.
Like other professionals such as certified public accountants (CPA) and chartered financial analysts (CFA), they have worked to obtain specific education and experience in the financial planning field.
Certified financial planners must fulfill a fiduciary duty. They must enter a legal and binding contract designed to adhere to the professional and ethical standards of the CFP Board. The right one will keep your financial goals in mind and at heart.
Integrated Tax Planning
Continuous tax planning is essential to those seeking to maximize their financial strategies. The field of taxation is constantly changing through new laws and regulations. Ensuring that you have a financial planner who can work with you to design more brilliant strategies is essential.
We integrate tax planning into everything we do. So you can take advantage of opportunities to save on taxes. In today’s changing tax landscape, that’s critical to your success.