7 Steps to Raising the Bar for Your Financial Plan  

You’re preparing for the future, saving diligently for retirement and following a long-term financial plan. Maybe you even feel ahead of the pack on the journey to financial security. But what if you wanted to speed up your progress or strengthen your position? How can you take your planning to the next level?

Wherever you are in pursuit of your financial future, it never hurts to think about what more you could be doing to advance your goals. Even small steps add up to material benefits over time when you invest your tax refund, put away a salary increase or bank what you save from cutting back on a fancy-coffee habit. Your steps beyond the financial basics will depend on your personal circumstances, life stage and long-term goals. Here are some ways you could consider taking your financial fitness to the next level:

Define and Cover Your Bases
Checking off the essentials is your best first move. Taking care of financial basics can mean something different depending on a person’s age, family situation and circumstances. Everyone should have a basic financial plan to address risk-based needs with life insurance, disability insurance, and an emergency fund to cover at least six months of living expenses. You should start saving early, leverage tax-deferred retirement savings options (such as IRAs), and take full advantage of any possible employer matching contributions to a 401(k) or other qualified saving vehicle. If you have student loans or credit card debt, incorporate a strategy for paying down those balances while continuing your savings plan. For people with children, the basics typically include saving for education and estate planning documents such as a will, durable power of attorney and healthcare directives. If a family member has special needs, basics could also involve a trust that ensures funds for their long-term needs.

Factor in All Your Risks
Once you’ve taken care of the foundation of your financial plan, a next level would look at addressing the significant risks to your long-term financial security. For example, your retirement plan should include strategies to address risks from rising health care and long-term care expenses, risks of market volatility that can affect your retirement savings, risks of inflation that can reduce your purchasing power, and the longevity risk of outliving your assets. A financial representative can review these risks and ways to address them.

Intensify Your Investments
If you have additional dollars to invest after your risk-based needs are met and you’ve maximized contributions to a qualified retirement plan (including catch up contributions after age 50), you can expand your investment strategy. Northwestern Mutual Investment Services is ranked among the Top 10 independent broker dealers in the U.S., providing a full array of brokerage products and services including mutual funds, college savings programs and individual securities as part of your comprehensive financial plan. In addition, a financial representative can help you connect with a qualified Northwestern Mutual Wealth Management Advisor for access to customized solutions such as Signature Advisory Programs and Private Client Services, offered through Northwestern Mutual Wealth Management Company.

Expand Your Estate Plan
As your assets grow, so can your desire to maintain control and direct how they are used and transferred after you die. Higher levels of estate planning include various types of trusts, which can serve many purposes. They can save you time and expense in the probate process, allowing you to dictate how your assets will be maintained and disbursed to heirs, protect your assets from creditors of beneficiaries, and reduce estate tax. Northwestern Mutual resources include trust services and financial representatives with estate planning expertise to help you design the estate plan to suit your specific wishes.

Construct a Tax Strategy
Taxes are inevitable, but you can minimize their impact with effective planning. At the basic level you may save for retirement in tax-deferred vehicles, while the next level outlines a distribution strategy for converting your retirement savings to income streams that will last as long as you live. A tax strategy helps you select various savings vehicles that grow over time to meet your goals while balancing your future tax liability. Your financial plan could incorporate options such as a Roth IRA or a Roth component in your 401(k) to add income flexibility and reduce your tax burden in retirement.

Leverage Your Business Connections
Business owners and individuals with other income-producing assets like investment property require a higher level of financial planning to address both their personal and business interests. This may include legal arrangements such as buy/sell agreements and succession plans to ensure continuity of the business or the continuation of investment income. A financial representative and other Northwestern Mutual business planning resources can help you think through and address needs in this area.

Keep on Communicating
As you progress through various life stages and financial levels, continue the conversation about your needs, dreams and aspirations with your loved ones and trusted advisors. Be sure you and your partner talk about your ideal retirement and lifestyle. Take time to review your financial plan and update key documents as your life evolves. Regular reviews with a financial representative are good opportunities to take a look at your plan and make sure you are on track. It’s also an opportunity to ask questions and clarify your understanding of the products and services available to you through Northwestern Mutual.

Whether you want to maintain your current financial fitness or step up the pace, it is important to keep an eye on your long-term goals and have a comprehensive financial plan to meet them. A financial representative can help you create a customized plan and guide you at all stages on the path to financial security.