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How To Plan For Life’s Challenges: Addressing Financial Goals While Preserving Family Legacy

By Richard Riva

If the last year has taught us anything, it has shown us that life is unpredictable. You may have everything figured out, and then life throws you a curveball and you must adapt to the circumstance.

That’s why when investors move through a timeline of common life events and unique circumstances, it is best to address any financial issues that may arise with a tailor-made plan that includes sound advice with proper strategy implementation and governance guidance. When our investors use our financial planning mechanism, we create a margin that follows the clients through their life stages and helps them navigate through many financial situations.

How Does It Work?

Our financial planning structure divides life into four distinct stages. There is the pre-accumulation stage, the accumulation stage, the distribution stage, and the legacy stage.

All of these stages serve different purposes in your financial plan and flow into one another. By managing each stage effectively and with proper financial planning tools, you can prepare yourself for not only the next stage of your life but also for many unforeseen events that may occur.

Pre-Accumulation And Accumulation Stage

During the pre-accumulation stage, many of our clients are managing their education and taking on student loans to pay for it. While it is easy to dismiss this stage of life as insignificant in the grand scheme of preparing for retirement, there are important values and building blocks that should be instilled. It is in this stage that we can help young folks learn how to budget, manage debt, set goals, and become financially literate. These tools will assist an individual and family in meeting the goals of their financial plan through every other stage of life.

During the accumulation stage, there are three different subcategories, including early accumulator, wealth builder, and income shifts.

Early Accumulator

During this subcategory, individuals will be purchasing their first car and getting married. They may start their first professional job of their career and will start participating in their 401(k) and developing a sound investment strategy.

Wealth Builder

During this second subcategory, individuals and couples will be accumulating wealth to support their current lives and their retirement. They will also likely be having children, buying a home, planning for any disability that could affect them, changing jobs, and planning for their children’s education. Under our plan, this is the time we can implement a financial model and funding/spending plan. We can also set up trust structures and an investment strategy.

Income Shifts

This starts about 10 years before the income-earner or earners are planning on retiring. This stage is when we start looking at your current income and start making plans that will enable you to sustain that level of income into retirement. At the beginning of this stage, we may want to reallocate some of your investments, implement a spending policy, and consider income replacement strategies, like disability insurance. During the latter half of this stage, we may want to tweak your investments a little bit more to ensure income sustainability throughout your encroaching retirement. We may also draw up succession plans or estate plan documents.

Life events at the beginning of this stage could include the loss of a job, the loss of a spouse, caring for elderly parents, or buying a vacation home. During the second half of this stage, investors could be considering selling their company, gifting to their children, minimizing legal exposure, or planning for the education costs of their grandchildren.

Distribution Stage

This stage is when you have finally made it to retirement and can start withdrawing your retirement funds and Social Security—but not without a well-thought-out financial management plan. You will want to carefully manage your assets, cash, and any risks while examining your income distribution and tax planning strategy.

Some issues to keep in mind about this stage of life is that you will face increasing medical costs and probably increasing travel expenses as you will want to visit your children and grandchildren. You will also need to examine long-term care needs; you will likely sell your home and some of your assets as you downsize.

We can help you manage all this with our financial planning tool, which will take into account your Social Security income, rising medical costs, end-of-life care plan, and help you distribute your income evenly throughout your retirement years.

Your Legacy

In this final stage, the legacy stage, you will outline your estate plan and any philanthropic contributions. You will need to think about your tax planning strategies that will benefit your heirs and how you want to distribute your estate to them. Investors will also give power of attorney to a trusted person in your life and complete any end-of-life directives that need to be addressed.

Your Wealth Management Plan Is Important

We at Wealth Management Solutions believe that each person lands somewhere on this planning tool, and with our guidance, clients can navigate smoothly into the next stage. No matter which stage you find yourself in, there are important steps you can take to manage your financial plan effectively. Not sure where to start? That’s okay. We can help. Schedule a complimentary consultation by contacting us at (949) 475-9700 or info@wms-llc.com.

About Richard

Richard Riva, the founding partner of Wealth Management Solutions, helps families advance their purpose in the framework of family financial matters. He brings comprehensive experience in banking, trust and investment services, and as an independent financial business, the passion in helping people and families, as a trusted advisor. Richard is a proud veteran and currently serves on the California State Guard.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific investment advice or recommendations for any individual.

Wealth Management Solutions and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.

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