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FAQ

Retirement Planning vs. Financial Planning – what’s the difference?

These two types of planning are very closely linked.  You could say that retirement planning is a part of good financial planning. However, it would be just as correct to say that financial planning is a part of good retirement planning!  The right conclusion here is that it’s actually impossible to say you’ve done a good job on one of them without having addressed the other as part of the process. 

Financial planning is making strategic investment decisions that will provide you with an income in your later years.  A competent financial advisor will help you look at a variety of ways to put your money to work. S/he will make sure your financial portfolio is well balanced and will sit down and review it with you at least once a year.  As part of the initial meeting, most financial advisors will have you fill out a lengthy questionnaire (on paper or as an interview) about your financial goals, focusing on how much you are able to save currently, how much you believe you can invest, and what your risk tolerance is.  As part of that initial discussion, many advisors will also ask about your retirement plans and goals for the future.  These questions can be hard to answer if you are in mid-career or just starting out, but as the years go by, it will become more and more critical to know exactly where and when you want to retire and how much your desired retirement lifestyle will cost.

Retirement planning takes a broader look.  Most people start thinking about retirement when they are somewhere in their 50s or 60s.  Certainly, good retirement planning involves a realistic picture of what you will be able to afford once you leave your current career or job, but it goes far beyond the financial aspects of the second half of life. 

The baby boom generation will be spending a lot more time in that “second half” than any previous generation in history.  Retirement planning includes decisions about where you will live, how you will spend your time, who you will ‘hang out’ with, and how you will bring meaning and purpose into your life.  Should you decide to retire at age 60, you have a very good chance of spending 20-25 years more on this earth.  For most people, that’s simply too long to spend just playing golf or bridge. 

Comprehensive retirement planning requires a holistic look at who you are, what you know, what you enjoy doing with your time, and who you want to spend your time with.  A good retirement coach will provide you with the opportunity to explore these things, through discussion and assessments.  If you are married you will probably want to go through this process with your spouse.  However, if your spouse is reluctant to be part of the coaching process, he or she can remain on the sidelines while you go through the process, as long as s/he is willing to participate in the homework with you - a series of worksheets and discussions between coaching sessions.