Quadrant #3 of Saving: Personalize Your Savings Plan

More on Saving.  Saving is a critical subject at all ages — for the simple reason that savings and investments give people choices at various points in life.  In my latest series, I have broken down the concept of Saving into “4 Quadrants”:

  1. Personal Vision
  2. Designing a Portfolio
  3. Programs that Personalize Your Savings (this week’s topic)
  4. Protecting Your Savings

Quadrant #3 of Saving is all about the Programs that Personalize your Savings Plan.

As you build savings there arise important considerations.  One of the biggest considerations is taxes.  Therefore, there are a number of savings vehicles that can minimize taxes in the present and/or the future*.  Another important consideration is the ability to access your savings when you want or need to.

Programs Related to Saving Taxes*

  • IRA and Roth IRA
  • Catch-up contributions
  • 401k, 403b, other pension plans like SEP, Cash Balance and SIMPLE
  • Trusts
  • College Savings Plans

Programs Related to Accessing your Savings (otherwise known as “getting your hands on your money”)

  • Social Security
  • Power of Attorney
  • Trusts
  • Estate Plan
  • Beneficiaries

Having an Investment Policy Statement (IPS) is another important and necessary element of personalizing your savings.  An IPS between an adviser and a client records — and updates — your goals and the direction of your financial life.

Another incredibly valuable tool is a Financial Plan.  A Financial Plan is a “personalization tool” that takes into consideration all of your current and future (planned) assets and savings.  A Financial Plan can also define your net worth, and can be used for estate planning.  The Financial Plan serves as a benchmark of where you are today and measures “how far between Point A and Point B”.  How much money will it take to achieve the life style you desire?  How close or how far are you from achieving that life style?

How many of these programs are you utilizing?  Labor Day weekend can be a great time to think about — and celebrate — at the very least where we are today.

*Seek advice from your tax adviser.


Leave a Reply

%d bloggers like this: