CPA Firm | Birmingham, AL | Sovereign CPA | Tax Services

Why Life Planning Matters: Tips for Living Retirement to its Fullest With Proven Financial Strategies

Life planning incorporates more than just financial decisions. 

There has been no radical change in the concept of retirement for the last couple of decades. In essence, you work, save, accumulate wealth, and then retire. But while the general trajectory is the same, retirement planning today requires the consideration of changing economic landscapes, increasing life expectancies, rising healthcare costs, and new investing and portfolio opportunities. 

At Sovereign CPA, one of our greatest strengths is our ability to advise and guide clients over a broad timeline and incorporate a variety of services to help people as they navigate retirement planning and other financial decisions. 

The Big Picture of Life’s Financial Journey —What is Life Planning? 

Everyone’s path to retirement is different. The outlook depends on employment history, pension funds, 401(k)s, and other retirement accounts, as well as a personal vision for the future. Financial planning and life planning are inextricably intertwined, as many of our major life decisions have financial implications.

Life planning services are more than just retirement, they incorporate major financial decisions as you work your way there. Whether it be investments, stocks, real estate, or other major financial maneuvers. 

Step #1) Consider Your Ideal Retirement and Lifestyle 

Whether you are in your 30s, 40s, or 50s, perhaps you have not yet formulated a specific vision of your golden years. Most people will have some vague idea, but when it’s so far in the future, they consider it mostly in terms of dollar amounts. Dollar amounts matter, but the life you envision is directly correlated to these dollar amounts. 

When envisioning retirement, consider whether: 

  • You want to say put, downsize your home, move to a different city, etc. Where do you plan to live out your golden years? 
  • What are some of your goals for retirement? Do you envision doing some traveling, visiting family frequently, etc. 
  • Will you be working part-time or making another type of income on the side?
  • How do you want to spend your time during retirement? 

At the same time, getting an idea of how much your lifestyle might cost provides a more concrete goal. Today, there are plenty of tools that help with this. They include retirement calculators that answer central questions about expenses. These tools will generate an actual dollar amount based on estimates and can be helpful for many. 

Step #2) Work Diligently to Pay Off Debt Before Retirement

Paying down debt on a fixed income is not ideal. The best time to eliminate debt is when you are still working. As part of life planning, it’s always wise to tackle debt in a focused and aggressive manner. 

Step #3) Implement Tax Planning and Diversification 

If paying off debt and making major financial decisions happen around your thirties, by the time you reach your forties, you may be in a good position to take a little more financial risk. This is a time to consider how you are taking advantage of: 

  • Tax benefits, 
  • Possible investment opportunities
  • Buying stocks

Making investments beyond your 401(k)s and IRAs is a great way to broaden the scope of your retirement savings. There is no set time to diversify, of course. You can broaden out your portfolio at any time and reap some rewards. It all depends on your goals. 

Step #4) Learn About All Retirement Saving Opportunities 

Today’s retirees have many options on how to financially secure their golden years. In addition to pensions and Social Security benefits, independent accounts help people build a portfolio that can stretch out for twenty or thirty years. All of these options have different benefits, regulations, and restrictions. 

As you’re venturing into life planning and retirement planning talk to your trusted financial advisor or CPA about: 

  • High-yield savings accounts 
  • Traditional IRA (Individual Retirement Account) 
  • Roth IRA
  • Simple IRA 
  • Traditional 401(k)
  • Roth 401(k) 
  • Simplified Employee Pensions

Learn About Retirement Spending Early On

Once you are a few years from retirement, we can help you learn more about some of the challenges of retirement spending. Most of the self-help guides out there focus on retirement as merely a moment in time or a destination. And yet, retirement is another phase of life, and these days it can last up to 30 to 35 years.

Running out of cash reserves in retirement is a source of anxiety for many retirees. Part of life planning includes learning tactics on better retirement spending such as: 

  • Eliminating fixed spending
  • Putting off getting your Social Security a little longer
  • Create a spending plan 
  • Stay diligent with tax planning 
  • Consider possible part-time jobs during retirement or other streams of income 

Talk to a Trusted CPA and Set Up the Retirement You Envision 

When it comes to life planning, you deserve a financial expert who understands the many options available.  While there are many things that you cannot foresee, using proven financial strategies ensures that you minimize risk and obtain the retirement you need. 

Ready to set your roadmap for retirement? Regardless of where you are in life, Sovereign CPA helps you pave the way. Connect with us today.

Scroll to Top