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Annual Financial Planning For Retirees – A Guide

pic of annual financial plan

Annual financial planning for retirees is the key instrument to get an overview on what you have and haven’t accomplished financially. This is especially important when life changing events happen like divorce, death of a spouse or retirement. Another occasion is when you plan to transfer wealth to the next generation. 

What Is an Annual Financial Plan?

An annual financial plan helps you to understand your financial status quo, financial goals and investment strategies that you need to reach your goals.

Elements of an Annual Financial Plan For Retirees

  • Monthly Income
  • Monthly Costs like utility bills, TV & internet costs, 
  • Yearly costs like insurances, memberships, taxes
  • Personal assets: real estate assets, jewelry, art, cars, stocks
  • Liabilities like loans, credit cards, other personal debts
  • Retirement Fund
  • Your tax situation 

Personal Annual Goals

Besides your financial status quo, your financial plan should contain your personal annual goals. This could include:

  • Create or increase your emergency fund
  • Refinance or pay off mortgages 
  • Divorce or new marriage planning
  • Creating or changing an estate plan
  • Set up a care fund for financing in-home care or long-term care
  • Add more funds to your trust accounts
  • Update or create your budget for the next year
  • Take a look at your lifestyle:

A care fund is a crucial asset category in your portfolio. It is far more important to be well taken care of in your golden years than passing on money to the next generation. This is why you should have a very generous care fund where you can be sure that you get the best medical and in-home care. In addition, you should assign a special financial power of attorney to someone who manages your well-being in times where you cannot do it yourself anymore.

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Investment Strategies Of An Annual Financial Plan For Retirees

What is an investment strategy? According to investopedia  “The term investment strategy refers to a set of principles designed to help an individual investor achieve their financial and investment goals. This plan is what guides an investor’s decisions based on goals, risk tolerance, and future needs for capital. They can vary from conservative (where they follow a low-risk strategy where the focus is on wealth protection) while others are highly aggressive (seeking rapid growth by focusing on capital appreciation).”

For retirees it is often important to adjust their risk allocation to be sure that you have enough liquidity to finance your daily costs of life.

Investment strategies help you to reach your annual goals. This could be a good opportunity to get professional advice from a trust company, a family office or a financial advisor. If you have partners already you are probably having an annual meeting anyway. 

Your personal investment strategy is also in the type of investments  for example:

  • including stocks, 
  • Private companies
  • bonds, 
  • money market funds, 
  • real estate, 
  • Private equity,
  • asset allocation, 
  • The risks you are willing to take

Emotional Side of an Annual Financial Plan For Retirees

Reviewing your annual financial plan can be an emotional topic. This is especially the case for widows whose spouses used to take care of their financial matters. They often find it difficult to get an overview over their financial situation and make good decisions. One of the reasons is that being a widow means that women are single again and won’t have a spouse as caregiver themselves. 

This is the reason why creating a care plan and care fund can give great safety and peace of mind. Unfortunately it forces us to have a closer look at end-of-life planning as well. 

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Antje Diana Baumgarten

Antje Diana Baumgarten

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