Financial Planning FAQs

Why should you make a financial plan?
Creating a financial plan provides meaning and intention behind your fiscal decisions to help you and your family achieve a successful financial future. We all try to make the best decisions, but a lot of the advice we receive or knowledge we collect along the way is made in isolated situations without the overall picture in mind. It also helps you to understand the reasoning and importance of the long-term when making critical choices with your finances. Whether you are looking to retire, invest, save up for a vacation, or all of the above, it’s crucial to have a plan in place to ensure your assets are protected for years to come.
What happens after the planning process?
After the initial planning process is complete, implementation is key. We implement the plan with you and are a great source of accountability. We are there along the way for the bumps in the road as life happens. This long-term relationship is going to greatly help you achieve your financial goals. We reach out to conduct regular reviews to go over your plans together and make adjustments as needed.
What’s the difference between a pension and a 401(k)?
Pensions are defined benefit plans while 401(k) plans are defined contribution plans. With a 401(k) plan, the employer and/or employee contribute a percentage of money to the employee’s individual account. Pension plans are employer-provided plans with guaranteed retirement benefits. In the case of a pension, the employer uses a formula based on each worker’s salary, age, and duration with the company to determine how much to pay into their retirement plan. Those receiving pension benefits may be able to rest easy knowing they will keep receiving the same amount for the duration of their lifetime. As for those with a 401(k), the amount received in retirement is based on how much money was contributed to their 401(k) account while they were still employed.
Can I safeguard my pension?
There are ways to help protect your pension, such as fully knowing and understanding your pension plan by reviewing the rulebook for your pension, or Summary Plan Description (SPD). Stay informed on your individual account, your benefit statements, and know your rights. Our company specializes in pension protection to help you be Financially Sound. Call us today for more information on safeguarding your pension plan at (760) 462-1156.
How does life insurance work?
A life insurance policy is a contractual arrangement between you, the policyholder, and the life insurance company. The policyholder determines the amount of life insurance coverage required and pays the life insurance company a premium to keep the policy in force. The way the premium will be paid will also be spelled out in the policy. The premium could be paid to the life insurance company as a lump sum, an annual or semi-annual payment, or monthly amount, for example. The premium must be paid according to the terms of the policy to keep the life insurance policy active. Should the policyholder die while a life insurance policy is in force, then the life insurance company pays out the death benefits specified in the policy. Additionally (applicable to permanent life insurance policies only), the insurance company may accumulate a cash value. Death proceeds are paid as a lump sum to the named beneficiary (the person who will receive the life insurance benefits). There are also options to explore with living benefits in policies that enhance the flexibility and control of the policy while one is still living. Living benefits give the policyholder the option to customize their life insurance and choose additional features that can provide value while they are living.
When purchasing insurance, what is transfer of risk?
The transfer of risk is a risk management method where risk shifts between parties. For example, risk may transfer from individuals to insurance companies, insurers to reinsurers, or between individuals. When buying insurance, the insurer agrees to protect a policyholder up to a specific amount in exchange for payment. If an insurance company assumes too much risk, they may transfer some of that risk to a reinsurance company, also known as insurance for insurers. Risk assessments are made by insurance companies in order to determine premiums and insurability.
Is life insurance taxable?
Life insurance proceeds are usually not taxable if they are paid to a specifically named beneficiary, such as your spouse or children. The life insurance proceeds may become taxable, however, if you name your estate as the beneficiary. At that point, the proceeds become a part of your estate, and can be subject to estate taxes.
What is the most common type of long-term care?
The most common type of long-term care is personal care and help with everyday activities. These activities include bathing, dressing, grooming, using the toilet, eating, and moving around.
What’s one of the most common financial planning mistakes?
NOT HAVING A SOUND PLAN. Your financial future is dependent on the choices you are making with your finances right now! Excessive spending, not investing, not accounting for risks in life, deferring taxes to retirement, and living paycheck to paycheck are all financial decisions that could have a negative effect on your life years down the road. Meeting with a financial professional and putting a plan in place is one of the only ways to help ensure your future will be Financially Sound.