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The Basics of Wealth Planning


Wealth management is an investment service that can help you plan for retirement. Here are the basics of wealth planning and how to plan for your future.

Every one of us—individuals, business owners and families—have an idea of the kind of lifestyle we’re seeking for the future. And wealth planning is a key process for getting there. To achieve your unique financial and lifestyle goals, it’s critical to begin wealth planning when you start your career and continuing on through every stage of your life.

But knowing how to begin the process can be daunting. Consider the following aspects of wealth planning, to get started on designing your own path toward achieving your goals.

Retirement Planning

A key part of wealth planning is ensuring you are on track to achieve your retirement income goals. The immediate retirement planning requirements of individuals and couples will vary, depending on age.

When you’re younger, the focus should be on ensuring you are saving as much as possible in your employer’s 401(k) or similar retirement plan. As you get closer to retirement, the planning should become more focused. Detailed retirement plans might include looking at a potential retirement budget, where you might live and how you might plan to spend your time in retirement. And once you do retire, it’s important to consider your distribution plan and when to claim Social Security.


Determining the right investment strategy for your goals is key to the wealth management process. Investments are the fuel that fund other wealth planning goals like retirement, starting a business, buying a house, funding college for your children and more.

It’s important to manage all investments as a portfolio and as a key part of your overall wealth and financial planning efforts. That means implementing an investing strategy across all accounts, including taxable, retirement accounts and others.

To determine their individual investment strategy, investors should consider how much risk they’re willing to take on, how diversified across various vehicles they need to be, and what their timeline looks like for capitalizing on investments, whether short- or long-term.

For many people, their first major investment will be inside of their 401(k) plan at work. From there, you might also consider additional investments such as within an IRA, as well as investments in taxable accounts.

Business Succession Planning

For business owners, wealth planning includes ensuring there is a succession plan in place for their business. A strategic succession plan helps to provide the business owner with full value for the business if sold, or to ensure that the business is passed on to family members if desired.

A unique wealth planning issue for business owners is funding their own retirement. Their wealth may be largely tied up in the business, so it’s important for them to fund a separate retirement account such as a 401(k) or a pension. Unfortunately, there can be no guarantee that they will be able to sell their business for the price they need to realize their retirement goals. It’s therefore critical to have additional retirement savings set aside. And along the way, funding a retirement plan can offer a much-needed tax break for business owners as well.

Estate Planning

Everyone needs an estate plan to ensure that your assets are passed on to your heirs in the fashion that you desire. This can range from a simple will to a trust or other estate planning strategy.

As part of that, it’s important to ensure that beneficiary designations on retirement plan accounts and life insurance policies are up-to-date and that they reflect your wishes. Beneficiary designations determine who receives these assets, and they override anything that might be specified in a will or other estate planning document. Be sure to keep these up-to-date if your life changes—for example if you get married, get divorced, or have a child.

Ownership of assets is part of estate planning, as well. How you own your home—whether jointly with your spouse, for example—will determine who receives this asset upon your death. The same is true with bank or investment accounts. Otherwise, the disposition of these and other assets should be designated in your will or other estate planning documents.

For those with minor children, it’s imperative that your estate planning includes naming a guardian for your children. You might also consider naming a separate guardian to care for the children and one to administer your estate assets on the children’s behalf.

Business owners will need pair their business succession planning with their estate planning efforts. In the event of their death, will the business pass to family members? Business partners? Whatever their situation, it’s important that there is a plan for business continuity, as well as liquidity for their family to realize value from the business.

Life and Disability Insurance

As part of holistic wealth planning, your life and disability insurance needs should be addressed to ensure your financial security and that of your loved ones.

Life insurance is an easy and inexpensive way for people to build an estate when they are relatively young. For those with a family or others to protect, a term policy can provide an affordable option. As you approach your 50s and beyond, the role of life insurance in your wealth planning will depend upon the level of other assets you’ve accumulated.

Disability insurance is another crucial type of coverage which provides security in the event you become disabled and unable to work. Disability insurance (often also called lifestyle insurance) is often purchased as a group benefit through an employee benefit program. You may need to purchase a policy privately if you need more tailored coverage, or if you do not have employee benefits available to you. Private coverage will generally be more expensive than group coverage, with more stringent medical screening requirements.

For business owners, both life insurance and disability insurance are key. The policy proceeds can be used to fund the business, provide a benefit to the business owner’s family or fund a buy-sell arrangement if one is in place with partners in the business.

Wealth planning is important at all stages of your life, regardless of whether you own a business, are employed, you are single or married with children. Be sure you work with a financial advisor who is experienced in helping clients in similar situations as yours.

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