58% of Americans have invested in stocks to diversify their income. However, investment returns might not be enough to ensure that you’ll have the money you need throughout retirement. Income planning helps address your income needs by assessing your current finances and providing strategies to improve them.
If you want to make sure that you have enough money to cover all of your expenses in retirement, read on to learn how income planning can help you.
What is Income Planning?
Income planning is a process that helps you make informed decisions about your retirement. It’s an important step in the wealth management process because it helps you make sure you have enough money to cover your bills.
While income planning may seem like it’s only for those nearing or already in retirement, this is not always the case. You can use income planning for other life events as well.
For example, if you’re going to pursue an education after graduating and need money saved up so that you can pay off student loans, income planning can help with that too.
How to Create an Income Plan
The first step to creating an income plan is defining what success looks like in terms of salary. This is important because it helps you determine what you need to earn to live comfortably, save for retirement, and pay off debt.
Once you’ve defined your ideal income, the next step is identifying how much money you’re making right now. You can use this information to create a budget that will help keep track of your spending. Make sure your budget aligns with your new definition of financial success.
From here, you can build a plan for how to get from where you are now to where you want to be. This will include short- and long-term steps that are specific enough that you can actually act on them.
Wealth management services can help you determine how much money you need to save to achieve your long-term goals. Your wealth advisor can also help you create an investment strategy.
Wealth Advisor vs. Investment Advisor
A wealth advisor is not the same as an investment advisor. The two are often confused with each other because they both help with financial planning. However, a wealth advisor helps with the entire financial picture of a client, including investment management and retirement planning.
A wealth advisor can also assist you with insurance and estate planning, as well as taxes.
They may have different titles at different firms. Some may be called financial planners or retirement planners.
The biggest difference between a wealth advisor and an investment advisor is who they work for. While investment advisors work for brokerage firms or mutual fund companies, wealth advisors work directly for their clients.
Manage Your Money
Income planning can be complex, but your wealth advisor will make sure it’s a smooth process from start to finish. Until you find an advisor, read our finance blogs for more tips on money. You might discover ways to manage your money more effectively.