The Value of Holistic Retirement Planning

Posted in: Personal Financial Management

Your savings won’t be the only thing you need to consider when it is time to retire. Rather, you want to approach your retirement with a clear picture of your entire financial well-being, so ask yourself:

  • Do I know my real net worth?
  • Are my finances in a state of disorder?
  • Do I know my risk exposures?

Getting organized and understanding the big picture are critical to making good financial decisions and planning for a successful retirement. The term I like to use for this is “holistic wealth management” — it’s a money management philosophy that digs beneath the surface to uncover all areas that need to be considered for successful retirement planning.

In a recent post, my colleague Chris Portner explained steps you need to take when you enter the five-year countdown to retirement. In this post, I explore what’s involved in holistic wealth management, and how it takes the guesswork out of your retirement planning and enables you to prepare for the golden years with confidence and precision.

As a holistic wealth management advisor, I have clients fill out a comprehensive investment portfolio questionnaire, and I consider all of the other assets of the client. This approach differs significantly from non-holistic wealth managers, who tend to ask for very little information — and then base decisions on just a handful of factors. A holistic approach, on the other hand, involves reviewing the details of several variables. These include:

  • Estate planning – We review the titling and beneficiaries in clients’ legal documents such as their will, health care power of attorney, and IRA.
  • Cash flow statement – I have clients make a budget that includes fixed expenses, discretionary expenses, income, and overall cash inflow and outflow.
  • Net worth statement – This details assets and liabilities. The net worth statement is based on a checklist that asks for the nitty-gritty on bank accounts, retirement accounts, annuities, property, and any other assets.
  • Emergency reserve – The emergency reserve is a liquid, easy to access savings account. Before you tie up funds in an investment, it’s always important to make sure you have enough emergency cash to cover unexpected needs.
  • Asset allocation statement – This details how much you have in stocks, bonds, cash, or real estate. As a subset of this category, it’s important to gauge how well diversified you are across asset classes.
  • Insurance – Insurance is particularly critical because it protects all of your assets and investments for retirement. For instance, without health insurance, a client’s net worth might easily be wiped out if he or she needs long-term care. Your insurance overview should also cover life insurance, long-term care insurance, and property casualty/liability protection.
  • Social Security benefit statements – It is always good practice to review these statements to make sure all earnings are recorded properly by Social Security and to determine how this income source will affect your future income needs in retirement.
  • Pension estimates/income – This income stream is an important piece in your overall retirement picture, whether you’re planning for a future retirement or your current retirement cash flow.

For wealth managers who take a non-holistic approach, starting a managed account means something altogether different. Typically, non-holistic managers ask you to fill out a simple form with a few basic questions about your assets. A lot of advisors take the information provided on that form at face value. However, an advisor with a view toward holistic management of the client’s overall wealth will dig much deeper.

A holistic wealth manager will ask for current statements pertaining to bank accounts, business assets, personal property, qualified retirement accounts, deferred annuity accounts, investments, real estate, residence, Social Security benefit statements, pension estimates, and liabilities. From these documents, I prepare net worth, cash reserves, and asset allocation statements, which serve as the foundation for retirement planning. In my opinion, without this thorough preparation, providing an accurate retirement income projection just isn’t possible.

When you evaluate the kind of financial advisor (aka wealth manager) to trust with your retirement income, look for someone who can provide a comprehensive analysis and take a big picture approach, rather than just focusing on investment assets. After all, it’s only when you know the big picture that you can start to answer important questions about whether you have enough money to meet your retirement target date. Otherwise, you are making critical decisions in a vacuum.

Knowing your net worth (total value of your assets minus your liabilities) will set the benchmark by which you not only see how you’re doing now but also how you will be doing in the future. Many families do not even have a household budget, and thus have no idea where their money is going. Just starting a budget and putting together a net worth statement will be a huge step toward getting your financial house in order.

For more information on holistic wealth management and help with your comprehensive retirement planning, please feel free to contact me at

Julie Finney is a licensed financial advisor with PSA Financial Advisors, Inc., and a registered representative with PSA Equities, Inc., member FINRA and SIPC.
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