6 Things That Should Be Part of Your Financial Plan

Two young women who, with the help of their Northwestern Mutual financial advisor, illuminated their financial blind spots and are well on their way to achieving their life goals." width="1200" height="675" />

If you've ever wondered if there's something else you should be doing financially, you're not alone. At Northwestern Mutual, we call areas of your financial plan that you have yet to address or consider “blind spots.” And to better understand them, we surveyed 1,600 people on the topic. 1

Turns out, most people know they’re probably missing something financially—they just don’t know what.

1. Not having a strategic retirement spending plan

According to our survey, 56 percent of Americans admit to not having a retirement spending plan that ensures their money lasts as long as they do. A good retirement spending plan helps you maintain your lifestyle while protecting your legacy and navigating common risks.

While saving a lot of money for retirement is a great place to start, it’s important to consider what happens next. For example, do you know how much you can sustainably withdraw each year from your retirement nest egg? Are your assets positioned in a tax-efficient way? Are you prepared for inflation? Do you have a good understanding of how long your assets will need to last (i.e., how long you may live)?

Your advisor can help you plan for all of these, giving you clarity around this common blind spot.

of Americans say they don’t have a strategic plan for spending retirement money to ensure it lasts as long as they do

2. Not having enough guaranteed retirement income

Closely related to retirement spending is another important topic: retirement income. And our survey found that 58 percent of people said not having enough income to last as long they live is a financial blind spot. We call these kinds of income sources “guaranteed income,” and the most common example is Social Security. While most American retirees will receive Social Security benefits, Social Security alone is rarely enough to cover all your essential living expenses.

But that’s where other guaranteed income sources like a pension (if you’re lucky enough to have one) and/or an income annuity can come in handy. When combined with Social Security, these guaranteed income sources can help you cover your essential living expenses for the rest of your life, giving you financial security and stability during retirement no matter how long you may live.

A conversation with your advisor can help you better understand your essential living expenses, how much guaranteed income is appropriate for your retirement and how you’ll make a plan to have the income you need.

say they don’t have a source of income in place that will last no matter how long they live

3. Not having a plan to help balance short- and long-term goals

While having a secure retirement is an important goal, it isn’t the sole focus of a good financial plan. And in our survey, we found 55 percent of consumers lack a comprehensive financial plan that helps them balance their short- and long-term goals.

At Northwestern Mutual, we believe a good financial plan takes a both-and (not an either-or) approach. That means your advisor can help you achieve both shorter-term priorities, like taking a well-deserved vacation, buying a new home or getting married, while also planning for longer-term goals like having a financially secure retirement , paying for long-term care and leaving a legacy for your family.

This kind of planning starts with a conversation—one that explores what is important to you, today and tomorrow. Then your advisor will design a plan to help you protect and grow your money in a way that lets you prioritize and achieve those goals.

of Americans say they don’t have a comprehensive financial plan for achieving their short-term and long-term goals

Quiz: Do You Have a Good Financial Plan?

Do you have a plan for how you’ll meet short-term, mid-term and long-term goals (like taking a vacation, paying for college or funding your retirement)?

4. Not having a plan for long-term care

One long-term goal that people often neglect is long-term care. In fact, our survey found that 54 percent of Americans don’t have a plan for long-term care . While many people think they won't need long-term care, research shows that most Americans turning 65 will need long-term care at some point. 2

Given the high likelihood of needing these services, combined with the rapidly rising cost of care, it’s critical to have a plan to pay for them. Your advisor can help you develop yours.

of Americans say they don’t a plan to ensure they won’t be a burden to their loved ones as they age and need more help with daily activities

5. Not understanding how inflation and taxes impact retirement savings

Fifty-six percent of our survey respondents admit to not understanding the impact of inflation and taxes on their retirement funds. Having a thoughtful strategy about where to place your dollars as you save them—and when and how to leverage them in retirement—helps you get the most from your hard-earned money.

Your Northwestern Mutual advisor understands the impact of taxes, inflation and other risks on your financial plan. And with access to proprietary financial software, they can provide you with strategic guidance to help navigate these challenges.

of Americans admit to not understanding the impact of inflation and taxes on their retirement funds

6. Not having the right mix of investments for your risk tolerance

Another key blind spot for 51 percent of Americans is not understanding their risk tolerance and/or keeping the right mix of investments. Simply put, investing involves balancing risk and reward. Low-risk investments typically yield lower returns than high-risk ones. The goal is to align your investment choices with your personal risk tolerance and financial goals.

And this is another area where your Northwestern Mutual advisor can help. Your advisor has access to professionally managed investment portfolios to help you do just that.

of Americans are unsure about the best mix of investments and risk levels for growing their money

Let’s personalize your financial plan.

Your advisor will help you define what’s important for you and your family—uncovering opportunities and blind spots. Then they’ll work with you to personalize a comprehensive plan to grow your wealth while protecting it from risks.

Your path to a better plan

A good financial plan can empower you to live the life you want more confidently. But like the rest of America, you don’t know what you don’t know. That’s why illuminating financial blind spots like these—and taking action to address them—can help you achieve life goals and improve your financial security.

And it all starts with a conversation. Your Northwestern Mutual advisor will ask better questions that uncover your blind spots and turn them into opportunities. Then they’ll work with you to tailor a plan that helps you grow your money while protecting it. And research shows clients who follow this kind of comprehensive approach to planning can experience better outcomes. 3

Northwestern Mutual and its financial representatives do not give tax advice. Taxpayers should seek advice regarding their particular circumstances from an independent accounting or tax adviser.

All investments carry some level of risk, including the potential loss of principal invested. Diversification and strategic asset allocation do not assure profit or protect against loss.

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1 Northwestern Mutual Consumer Financial Blind Spots research; February 2024

2 LongTermCare.gov, Who Needs Care?

3 Hal E. Hershfield, Assessing the Value of a Holistic Advisor (2024). In Hal Hershfield’s research a comprehensive approach to planning means a client has Permanent Life Insurance, either investments or annuities, and a recent financial plan.

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Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company and its subsidiaries. Life and disability insurance, annuities, and life insurance with longterm care benefits are issued by The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM). Longterm care insurance is issued by Northwestern Long Term Care Insurance Company, Milwaukee, WI, (NLTC) a subsidiary of NM. Investment brokerage services are offered through Northwestern Mutual Investment Services, LLC (NMIS) a subsidiary of NM, brokerdealer, registered investment advisor, and member FINRA and SIPC. Investment advisory and trust services are offered through Northwestern Mutual Wealth Management Company (NMWMC), Milwaukee, WI, a subsidiary of NM and a federal savings bank. Products and services referenced are offered and sold only by appropriately appointed and licensed entities and financial advisors and professionals. Not all products and services are available in all states. Not all Northwestern Mutual representatives are advisors. Only those representatives with Advisor in their title or who otherwise disclose their status as an advisor of NMWMC are credentialed as NMWMC representatives to provide investment advisory services.