5 Major Reasons to Review Your Financial Plan

by Eric Biddle

by Eric Biddle

Is it time to review your financial plan?  This assumes, of course, that you have a plan.

I've always loved Zig Ziglar's quote, "If you aim at nothing, you will hit it every time."  By reviewing your plan at least annually, you can make course corrections along the way to make sure you are going to hit your target.  It also gives you an opportunity to reevaluate the target.  Planning for your financial future can be more like skeet shooting or hunting than shooting at a stationary object.  Sometimes the desired destination moves and changes.  That's life!  It is necessary to re-calibrate.

We reanalyze our financial planning clients' plans on an annual basis.  Sometimes we even need to make course corrections in between the annual reviews.  Here are some major reasons to review your financial plan:

1. Change of Job.  With job changes come more than the obvious change in salary.  Every employer has a different 401(k) matching program, life insurance opportunity, short-term and long-term disability insurance, and health insurance.  These items significantly impact your overall savings strategy and risk exposure.  Sometimes a change in job simply means you've received a promotion with increased income.  Still, it is a good idea to review your plan.  As your standard of living changes, so does your need for retirement savings.

2. Retirement Timeline.  Some employers offer early retirement.  Some people, upon evaluating their lives, decide they want to retire earlier or later.  Sometimes life happens and you don't get to choose but retirement is happening now whether you like it or not.  A change in your retirement timeline means a change in your overall plan.  You need to be asking questions like: Do I need to make changes to my spending habits?  Will my savings last a lifetime?  Should I work part time?

3. New Baby.  Congrats, you have a new little bundle of joy!  Now it is time to explore whether or not you have enough life insurance.  It is time to think about paying for college or dare I say, a wedding. 

4. Loss of a Loved One.  Whether you've lost a loved one and received an inheritance or you've lost a spouse and therefore some family income, it is time to evaluate how these changes affect your overall plan.

5. Market Fluctuations.  When the market swings drastically, especially if it heads south, it might be time to rethink some plans.  Primarily, this is true if you needed the money soon.  A market crash can tragically impact your goals.  (However, if you have planned properly, the funds you need the soonest should be positioned for zero to conservative losses.)  Regardless, it is time to re-calibrate. 

Even if major shifts in your life have not occurred recently, it is still important to review your investment choices, your spending, your savings strategy, and your risk exposure at least annually.  Of course, we at Fisher Wealth Management stand ready to help!