What’s the Difference Between Retirement Planning, Financial Planning, and Estate Planning?

Q. My wife and I are hoping to retire in 12 years. We have already done our estate planning but have been told by friends and relatives that we need to also do financial planning and retirement planning. Aren’t financial planning and retirement planning the same thing done by the same person, or are they different? If we did our estate planning with your law firm, can we also do our financial planning / retirement planning with you? Thanks for your help!

A. Many of us have lifelong goals to acquire and save enough money to retire comfortably, and to ensure that our loved ones are covered should something happen to us. Understanding the difference between financial planning and retirement planning can be critical to developing a retirement income strategy to achieve these goals. While financial planning, retirement planning, and estate planning are all connected, they are all important in their own right, and you need to understand them each to plan properly and effectively.

Financial Planning:

Although financial planning is an extremely broad term that can apply to many different professions and encompass many different advisory approaches, traditional financial planning focuses primarily on the long-term goal of accumulating as much wealth as possible, and often includes managing that wealth for the client. Financial planning also focuses on having emergency funds in place, including disability insurance and term life insurance should you meet an untimely disability or demise.

Retirement Planners Focus on the Bigger Picture

Good retirement planning helps ensure that you’re saving and investing enough to hit your financial target when you retire. A good retirement planner provides objective advice and educates you about the choices available. By running multiple “what if” scenarios, a retirement planner can identify the set of decisions that result in the best retirement outcome for you and your family. These projections and comparisons are used by the retirement planner to answer questions such as:

  • How much should I be saving for retirement?
  • What investments are best when I have retirement in mind?
  • How can I protect my savings against a bad market?
  • Should I use my extra money to pay off the mortgage, or put more into my 401(k) plan?
  • How much income will I have in retirement?
  • Should I keep this life insurance policy?
  • How will inflation affect my retirement lifestyle?
  • How much can I withdraw this year?
  • When can I retire?
  • Using this information, retirement planners can help you see what your finances will look like five, ten, or twenty years into the future.

Retirement Planning

Retirement planners generally work with people ages 55 and older, who are within 10-15 years or so of their desired retirement age. These financial professionals focus on strategies to ensure that those who are closer to retirement will have a comfortable lifestyle when the time comes to retire. Retirement planners know when you can afford to retire, how to coordinate your assets, how much you can withdraw from retirement savings (and from which accounts), how to manage expenses, and how to help you plan for catastrophic expenses such as long-term care.

Retirement planning is done during a time where you’ll really need to think about your short-term goals. Here are some of the issues you should reevaluate and questions you should consider when meeting with a retirement planner:

  • At what age would you like to retire?
  • Where would you prefer to live?
  • What kind of lifestyle do you desire in retirement?

A retirement planner helps you properly plan withdrawals from your lifetime of accumulated investment and retirement accounts.

Retirement Planning and Long-Term Care Planning Attorney

Besides being a Certified Elder Law Attorney, I am also an experienced retirement planning advisor and long-term care financial advisor through my financial services company, Lifecare Financial Services, LLC, which has been in business since 2006. Lifecare Financial Services works often in connection with other top retirement and long-term care financial advisors around the country. As a Certified Elder Law Attorney and Retirement Planner, my goal is first and foremost to help you secure your financial future and well-being. A secondary goal for some of clients is to also leave an inheritance for their children and/or grandchildren.

Whether your retirement is coming up soon or many years away, it is important to protect your hard work and your golden years with effective retirement planning and long-term care financial planning. Learn more here.

Estate Planning: Getting Your Affairs in Order

Estate Planning is all about what you leave behind to your children, grandchildren, or other intended beneficiaries upon your death. It includes what is left in your retirement accounts, savings, your real estate, and your life insurance policies.

If you die without proper estate planning, it could create unnecessary headache for those left behind and needlessly waste a significant portion of your assets on taxes, attorney’s fees, and probate expenses. This is why it is important to have an experienced estate planning attorney, such as those here at the Farr Law Firm, create or review your estate plan — your will, trust, account titlings, and beneficiary designations — to make sure everything is up-to-date and appropriate for your stage in life.
It is wise to review your estate plan at least every 5 years and make necessary updates accordingly. Read more about estate planning here.

Plan in Advance for Peace of Mind

As you can see, financial planning, retirement planning, and estate planning are all very important. Please call us today if you don’t have your planning in place or if you would like to make any updates.
We here at the Farr Law Firm have strategies in place to help all types of people at all ages to plan for themselves and their loved ones. By planning in advance, each person can retain the assets it has taken a lifetime to accumulate and the peace of mind that their family’s needs will be adequately and properly addressed.

Estate Planning Fairfax: 703-691-1888
Estate Planning Fredericksburg: 540-479-1435
Estate Planning Rockville: 301-519-8041
Estate Planning DC: 202-587-2797

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