The economy is improving and inflation is under control, so why are so many of us still feeling financial pressures and fears about a secure future? New research from the Goldman Sachs Retirement Survey and Insights a report2024 finds that planning is the missing link for many families. The study concluded that having a written (digital) financial plan leads to significant positive effects. Let’s explore.
Financial planning is the missing link to true financial security
Most people work, earn money, and make financial decisions that affect how they allocate their income in the near term. These can be considered the first links in a series of financial planning procedures. Many of them also have goals for their futures – retirement, children, travel, and more – and these are the final links in the chain.
Between the beginning and the end of the series is planning. It’s a simple habit that has big positive results.
Planning is the link that connects what is happening in your life today to what you want to happen in the future.
Why does planning work?
While many individuals strive to save, they often fail to achieve their goals without an organized plan.
A well-organized financial plan can lead to transformational improvements across multiple dimensions of personal finance, providing a more secure and confident financial future. Here’s how planning makes a difference:
Planning leads to greater wealth and higher savings values
The report’s data is massive. Having a personal retirement plan was the second most important factor (after education level) associated with increasing retirement savings. Both employed participants and retirees who had a personal plan when preparing for retirement had greater savings. Here is some data:
- 80% of people with a dedicated plan are on track or ahead of plan with their savings (vs. 39% of people without a plan)
- People with a plan are 62% more likely to increase their savings each year (vs. 29% without a plan)
- 52% of people with a plan have more than $200,000 in savings (vs. 23% without a plan)
Additionally, a study by Charles Schwab found that financial planners accumulate significantly greater wealth, with planners saving an average of $1.9 million for retirement, compared to $788,000 for those without a plan.
Planning encourages disciplined saving, which helps individuals build significant wealth over time.
Planning results in higher levels of financial confidence
We hear it from Boldin Planner users every day: planning leads to confidence.
“So far, the comprehensive nature of the program is amazing. I can consider all aspects of my financial plan and test different scenarios until I am confident in my plan.
“It’s a tool that rivals and outperforms tools that were previously only accessible by professionals at a fraction of the cost. It enables a DIY planner to feel confident in their plan. Thank you very much!”
“It’s comprehensive and makes planning very easy. The recommendations and scenario functions are very helpful. I stress less and have confidence that I’m not missing anything important.
Goldman Sachs’ retirement research provides data to support these experiences. Individuals who have a personal financial plan are significantly more confident about achieving their financial goals. Specifically, 80% of people with a plan express confidence in their retirement outlook, compared to only 42% of those without a plan.
Another study by Fidelity reinforces this, noting that individuals who engage in financial planning are twice as likely to report high levels of financial well-being.
This increased confidence comes from having a clear roadmap that helps navigate expected and unexpected financial events, allowing individuals to make informed decisions.
Improve financial results
Those who plan are more likely to experience ongoing improvements in their financial situation. Goldman Sachs data shows that 62% of people with a financial plan reported year-over-year financial improvement, compared to just 32% without a plan.
Vanguard’s research supports this, noting that people planning for retirement are more likely to set and achieve additional financial goals, allowing for steady financial progress year after year.
Planning helps individuals make better decisions and adapt to changing circumstances.
Better ability to handle competing financial priorities
Managing multiple financial goals at once — such as saving for retirement, paying off debt, and covering educational expenses — can be stressful. However, those with a financial plan are better equipped to handle these competing priorities. Goldman Sachs notes that 43% of planners can comfortably manage multiple financial goals, compared to only 35% of non-planners.
Additionally, the CFP Board of Directors has found that planning helps individuals allocate resources more efficiently, ensuring that core financial goals are not neglected.
Early retirement
Not only does planning increase savings, it can also help individuals retire early. According to a Goldman Sachs survey, 61% of people without a plan expect to delay retirement due to insufficient savings.
However, those who plan are more likely to achieve their retirement goals sooner. A TIAA study found that retirement planners are 45% more likely to retire early than non-planners, thanks to disciplined savings and investment practices.
It is likely to improve financially year on year
One of the most important benefits of planning is that it promotes continuous financial growth. Those who have a financial plan are more likely to experience positive financial results each year. The Goldman Sachs survey shows that 62% of planners reported financial improvement year over year, compared to only 32% of non-planners.
This consistency is a hallmark of financial planning, as planners regularly review and adjust their strategies to reflect life changes, market conditions, and evolving goals.
Feel more comfortable managing money
Finally, financial planning leads to a greater sense of control and comfort in managing money. Goldman Sachs data reveals that 40% of planners feel comfortable managing their savings and investments, compared to just 16% of those who don’t have a plan.
Research by Northwestern Mutual found that planners are three times more likely to feel financially secure, as planning helps reduce the anxiety and uncertainty often associated with making financial decisions.
Do you have a plan?
The benefits of financial planning extend beyond simply increasing wealth. From enhancing confidence to improving overall financial outcomes, a structured approach to personal finance provides individuals with greater control, security, and long-term success. Planning is the key to overcoming the complexities of financial life and achieving a secure future.
Start (or update) your plans with Boldin’s planner.
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