5 Ways to Help Improve Your Financial Health

Updated: August 15, 2022

As doctors help take care of physical health, good financial professionals help take care of financial health. Just as you consult
a doctor for a range of health questions, you can work with a financial professional on a host of different options regarding your plans for retirement.

In fact, simply having a financial professional could be good for your mental health: 70% of baby boomers who work with a financial professional describe themselves as "excited and confident" or "happy and cautiously optimistic" about retirement versus 33% of respondents without one.¹

Here are five areas where your financial professional can help you keep your finances in top shape.

1. Optimizing Savings Strategies to Help Achieve Your Desired Lifestyle

 

Having enough savings is an essential part of financial health. Your financial professional can provide important guidance on optimizing a savings strategy, such as how much to save and how to reduce expenses.

Develop and refine key parts of a savings strategy by asking your financial professional questions such as:

How much money do I need to achieve my desired lifestyle before and after retirement?
Your financial professional can help clarify financial goals, develop estimates for how much it will cost to achieve them, and create monthly savings targets to help keep you on track.

How can I save while managing competing financial priorities?
Financial professionals can help prioritize different financial goals, such as saving for retirement, your children’s education, vacations, or home improvement. Financial professionals can also help identify the most effective mix of savings tools to reach those goals.

 Use our Annuity Income Calculator

2. Crafting an Appropriate Investment Strategy

 

Ask questions like these to get guidance on investment decisions:

Do I have the right mix of investments for my age and income?
Many people change their investment mix as they age, moving from an emphasis on growth in earlier years to the need for income and savings protection near retirement. A financial professional can help determine the mix of stocks, bonds, cash, and other tools to provide the right balance of potential growth and income for an individual’s age, income, and other factors.

How can I reduce the risks in my financial plan?
People face multiple risks to their savings, such as the threat that market declines could decrease the value of investments or the possibility that they’ll outlive their savings. Some people are more concerned about certain risks than others – a financial professional can help identify the most pressing concerns and develop an appropriate investment strategy to manage them. For example, a financial professional might suggest a guaranteed income strategy for someone particularly concerned about running out of money in retirement.

3. Minimizing Taxes

 

Taxes may be a fact of life, but there are tax-smart strategies that can reduce their impact.

Work toward minimizing your tax burden by asking questions such as:

What are the tax implications of making changes to my investments?
Financial professionals can explain the tax implications of buying and selling different investments, which may help you keep more of the potential gains. For example, short-term investment gains are taxed at a higher rate than long-term ones, so timing is important.

How can I minimize taxes in retirement?
Your financial professional might suggest a diverse mix of retirement accounts with different tax structures. For example, some people balance withdrawals from 401(k)s and traditional IRAs – which are subject to income tax – with income from a Roth IRA, which is generally tax-free if account provisions are followed.
 

4. Planning for Medical Expenses

 

Health care costs are among the top retirement concerns for most Americans, but financial professionals can help you prepare for these expenses.²

Asking these questions can help ensure that health care considerations are included in a financial plan:

How do I make sure I’m well taken care of in the event that I can’t make medical decisions for myself?
Financial professionals can assist by connecting you with other professionals, such as an elder care lawyer to draft a medical power of attorney that designates who will make medical decisions in case it’s needed. Financial professionals can also guide you on how to communicate your intentions to your designee.

How can I make sure I have enough money for future medical expenses?
Experts say the average person can expect to spend about 80% of their current income each year during their retirement depending on income, retirement lifestyle, and health care costs.³ Medical expenses can be substantial. There are types of insurance that specifically address future medical expenses, such as long-term care insurance riders and chronic illness coverage. A financial professional can help assess an option’s suitability and review existing coverage to determine any gaps.

5. Tackling Estate Planning

 

Thinking about what will happen to your money after you’re gone may be difficult, but planning ahead can help you ensure that your loved ones are taken care of financially. Financial professionals can explain the importance of this process and partner with other professionals to help you develop an estate plan.

Raise these questions with your financial professional to establish a legacy plan:

How can I ensure that my money and other assets go where I want them to after I’m gone?
A financial professional can help find an estate planning attorney to develop a legal structure that reflects your wishes while identifying insurance or other financial tools that provide for surviving spouses and children.

How do I implement my estate planning attorney’s recommendations?
Financial professionals play an essential role in implementing estate plans. For example, your financial professional could help ensure that specific assets are correctly titled and transferred to trusts and remind you to update beneficiary forms on retirement accounts, insurance plans, and other documents.

Asking these questions can help you make important financial decisions and maximize the benefits of a relationship with a financial professional.