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This Simple Step Makes It Way More Likely You’ll Meet Your Retirement Goals


Saving for retirement isn’t easy. How much cash will you need in your coffers once you exit the workforce? How much from each paycheck should you put toward retirement, and how aggressive should your asset allocation be?

Trying to make all those often overwhelming decisions as you fly by the seat of your pants can just add to the difficulty, and a new survey shows that such a haphazard approach makes you significantly less likely to meet your retirement goals at the end of the day.  There is, however, a tried and true solution, according to data and analytics company Hearts and Wallets.

The secret lies in actually writing out your financial plan. The best way to come up with a strong, workable retirement savings plan is to work with a financial advisor.

The Benefits of a Written Financial Plan

According recent research from Hearts and Wallets, 52% of households with written financial plans save at least 10% of their income for retirement, while only 36% of households without a written financial plan manage to save that amount. Putting aside such a healthy chunk of your income each month puts you off to a huge head start when it comes to having enough money to comfortably retire at a reasonable age.

With that in mind, how common is financial planning in the U.S.? Around 82% of Americans report at least thinking about long-term financial planning, which is of course the first step. Breaking that 82% down further:

  • 28% think about planning but don’t actually have any sort of detailed financial plan
  • 34% have a plan but haven’t taken the time to write it down
  • 20% have written plan, either on paper or digitally, with a strategy of how to attack at least some of their goals

Inertia is one of the basic principles of behavioral finance — essentially, it’s the idea that people are much more likely not to take action than to do something, including a relatively simple thing like making a financial plan. Overcoming that inertia, though, is a key step to making the later part of your life as smooth as possible.

Financial Plan Basics

financial plan retirement goals

The research shows that a financial plan can be a key in getting a family ready for their retirement. What exactly is a financial plan, though?

Put simply, a financial plan is a comprehensive overview of your goals financially and a strategy for how to achieve them. The exact nature of the plan will be dependent on what you want to do with your money. If you have three children you’d like to put through college, saving for education is likely to be a major part of your plan. If you are looking to buy a home in 10 years, putting money aside for that will be a major part of your plan.

Your financial plan will likely address short-, medium and long-term goals. No matter what else you are planning for, putting aside money to live off of in retirement is likely to be at the center of just about everyone’s financial plan, because no one wants to have to work forever.

Financial Advisors and Financial Plans

financial plan retirement goals

While you can certainly try to make a financial plan by yourself, hiring a professional financial advisor can make things much easier. Make sure you find a financial advisor whose services include comprehensive financial planning rather than one who focuses only on investments.

A financial advisor will talk through your calls and come up with plans to get to all of them. Depending on the advisor, he or she may also be able to manage your investments and get you set up with the various accounts you’ll need.

If you want help finding an advisor, consider using SmartAsset’s free financial advisor matching service.

The Bottom Line

A recent study from Hearts and Wallets finds that people with a written financial plan are more likely than those without to save at least 10% of their income for retirement. A financial plan is a fairly simple concept — just a collection of goals and steps to achieve them — but a financial advisor can help you put one together that will work for you.

Financial Planning Tips

  • There are a lot of financial advisors out there, and the process of finding one can be intimidating. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you do nothing else, make sure to use a workplace savings plan like a 401(k) if you have access to one.

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