Analyzing the Flows in Your Financial Plan

For most investors — even those with significant wealth — a secure financial future doesn’t simply happen. Instead, it must be carefully crafted to help meet your most important goals and leave nothing to chance. Of course, the future is unpredictable, and your own personal situation changes over time. That makes it all the more challenging to answer the most crucial of financial questions: Are you on track toward achieving your financial objectives?
As an investor looking to make the smartest possible decisions about your money, you need a comprehensive understanding of your current financial situation and a reliable roadmap of where you’re headed. The key lies in an important but often overlooked component of the financial planning process called cash-flow planning.
Analyzing Your Personal Balance Sheet
Working with your financial professional, you can employ advanced computer modeling to develop “what if” scenarios about your financial future by projecting your cash flow, asset growth potential, taxes, the size of your estate and other relevant financial data over the full length of your life expectancy. This will allow you to complete a series of "what if" situations that are designed to assist you in making intelligent decisions regarding one or a series of objectives.
Retirement planning. Cash-flow planning analysis allows you to estimate the growth of your overall net worth each year based on the specific financial strategies you use or are planning to use, as well as the impact of taxes and inflation. You and your financial professional can evaluate that information to assess if you’re saving and building wealth fast enough to help reach retirement on schedule and in the way that you envision. Likewise, cash-flow analysis will enable you to create the optimal retirement income distribution plan built around your specific needs to help ensure you don’t outlive your savings.
Estate planning. Without proper planning, estate taxes may significantly erode much of the estate you plan to leave to your heirs or to charities. But the cash-flow-planning process can help your heirs avoid unpleasant surprises in the future by estimating your estate tax burden and other related costs.
Business succession planning. If you are an entrepreneur, the decision to keep or sell your firm can significantly affect the strength of your cash flow and overall net worth. By using techniques to develop multiple “what if” scenarios, you’ll be well positioned to make the most informed business-succession decision possible — one that reflects your needs, those of your family and those of any partners or employees you wish to include in the process.
Regardless of your goals, the process of cash-flow planning can provide you with the roadmap you need to make informed, confident decisions regarding your wealth and your financial plan.
*The content of this material was provided to you by Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor for its representatives and their clients. This article may be picked up by other publications under planner’s bylines.
Anthony M. Leonardi, MBA, CFP, CRPC, is a registered representative of Lincoln Financial Advisors Corp., a broker/dealer, member SIPC, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor, 800 Westchester Ave., Suite 504, Rye Brook, NY 10573. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was provided to you by Lincoln Financial Advisors for its representatives and their clients.