Retirement planning is crucial for building a financially stable lifestyle after you exit the full-time workforce. The overarching goal is to first account for your wants and needs in retirement. Then, building and following a financial strategy for supporting those wants and needs.
From that perspective, holistic retirement planning makes sense on a practical level. Retirement is a stage of life with a variety of expenses and opportunities. An effective plan for a solid financial foundation in retirement has to account for all of those factors.
A less-complete retirement strategy may overlook certain needs by being too focused on certain parts of retirement planning. Or, it might emphasize the short term at the expense of longer-term stability.
That kind of planning can still be useful in certain contexts. However, it can be less than ideal for building a secure financial situation as a retiree.
In contrast, holistic retirement planning considers both the short and long terms. By taking everything into account, a more complete strategy for retirement planning can emerge.
Let’s take a closer look at holistic retirement planning. We’ll provide a clear definition of the holistic approach to retirement planning. We’ll also review the value of holistic financial planning and retirement planning for retirees.
What is the Holistic Approach to Financial Planning and Retirement Planning?
It’s important to understand that holistic retirement planning isn’t a precisely defined process with highly technical workflows. Similarly, there’s no single strategy to deliver a holistic retirement plan.
It’s better to view holistic retirement planning as a mindset, both for you and your financial planner. The goal is to structure retirement savings, investments, and obligations to align with big-picture goals and needs. Crucially, a holistic approach prioritizes decisions that can provide the best returns or minimize financial liabilities overall.
Here’s just one example. In tax planning, we believe it’s not about what you earn but what you keep. Whether it’s through increased income or reduced liability, the best decision will keep more money in your pocket (or savings account).
That same foundational principle applies to holistic retirement planning. It’s about looking at the big picture and then diving deeper into the relevant specifics. The objective is making a choice that benefits you not just in one area but across the board.
Making decisions in a silo — by focusing only on taxes or investments, for example — can seem prudent at the moment. However, it’s hard to truly know if the decision will offer enduringly positive results. Holistic retirement planning goes beyond this more limited view.
In other words, holistic retirement planning means making decisions that will be best for you on the whole. It takes all aspects of preparing for retirement into account in a top-down approach. That same concept applies to the broader field of holistic financial planning.
That means a holistic strategy can include all of the following areas, as well as any others relevant to your unique situation:
- Income. That’s true both in terms of current income and income during retirement. It includes everything from investment income to Social Security and any consulting or other work done after retirement.
- Investments. It’s crucial to account for your personal risk tolerance when investing. It’s also vital to plan for a sustainable withdrawal rate of about 4% annually from retirement accounts.
- Expenses. From groceries and home upkeep to travel and entertainment, a holistic retirement strategy addresses these financial wants and needs. More specifically, this often includes:
- Taxes. Taxes can represent a significant financial liability in retirement, based on the type of investment accounts used and many other factors. Holistic planning takes tax implications into account.
- Long-term care. The Census Bureau reports average life expectancy in the US has increased in the long term. That places additional importance on planning for the costs of potential long-term care needs.
- Life insurance. Insurance is both a source of financial protection and a potentially significant expense. Finding the right life insurance coverage is an important part of the bigger picture.
- Medicare. Medicare is a valuable asset for many retirees. However, high earners may have to pay more (the Income-Related Monthly Adjustment Amount (IRMAA)) to receive coverage. Finding the best plan for your needs and minimizing IRMAA are both key topics in holistic retirement planning.
- Estate planning. Effective estate planning supports your wishes for your assets and makes it easier for your heirs to move forward during a difficult time.
What Qualities Should I Look for in a Holistic Retirement Planner?
At a minimum, a holistic retirement planner should focus on the complete picture of your retirement. It’s also critical that they take the same view when discussing options with you or providing advice.
Other key qualities to look for in holistic retirement planners include:
- An advisor, not a salesperson. Fee-based advisors don’t have the ulterior motive of selling specific financial products or insurance policies. They provide guidance, not a sales pitch.
- Experience and knowledge. Experienced retirement planners can leverage their knowledge of this complex process to your benefit.
- A fiduciary. Fiduciary retirement and financial planners take a binding oath to always act in their clients’ best interests. You shouldn’t settle for anything less when planning for your exit from the workforce and golden years.
- A CERTIFIED FINANCIAL PLANNER™ professional. Financial planners who earn the CFP® certification demonstrate a commitment to their profession above and beyond the minimum. They complete a rigorous testing process and engage in ongoing professional education to better serve clients.
Finding the Right Holistic Retirement Planner
Dechtman Wealth Management offers a broad scope of financial and retirement planning services. This empowers our advisors to be more strategic in planning to reach your unique goals in retirement.
Our team brings decades of experience to the table and is proud of our fiduciary oath. With CFP® professionals on staff, we make a commitment to doing more for our clients. We can help you not only develop a thoughtfully crafted plan for retirement but follow through on it as well.
Ready to learn more about holistic retirement planning? Schedule your free assessment.
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