While some may attempt to use these three terms interchangeably, they should not be used that way because each type of planning has a very different set of objectives.
Traditional financial planning primarily focuses on a client’s long-term goals as they relate to accumulation and management of wealth. This process also includes planning for emergencies by having adequate savings established and setting up disability and life insurance policies.
Retirement planning primarily focuses on shorter term goals as they relate to how much you need to save for retirement, when you will reach these savings goals so you can retire, and the types of investments that are appropriate for your situation and risk tolerance. Retirement planning also considers issues such as paying off a mortgage or other debts, cash flow needs for your retirement years and when to initiate withdrawals. Using this information, retirement planners can see what your finances will look like five, ten or twenty years into the future.
Estate Planning primarily focuses on what you leave behind to your loved ones once you pass away. Without proper planning, those left behind may face obstacles in distributing your assets, paying off your liabilities or incur unnecessary estate administration expenses or estate taxes. Comprehensive estate planning also includes considering what will happen should you become incapacitated as well as planning for end of life measures.
For more information on estate planning services in the Greater Baltimore area, please contact Stouffer Legal at 443-470-3599.