The economy is improving and inflation is under control, so why do so many of us still feel financial pressure and worry about a secure future? New research from the Goldman Sachs Retirement Survey & Insights Report, 2024 finds that planning is the missing link for many families. Research shows that having a written (digital) financial plan has the most positive effects. Let’s check.
Financial Planning is the Missing Link to Real Financial Security
Most people work, earn money and make financial decisions that affect how their income is distributed in the near term. These may be considered the first links in the chain of financial planning activities. Many also have goals for their future – retirement, children, travel, and more – and these are links to the end of the chain.
Between the beginning and the end of the chain is arranged. It’s a simple practice with a HUGE positive effect.
Planning the link that connects what is happening in your life today and what you want to happen in the future.
Why Planning Works
Although many people are diligent about saving, they often fail to reach their goals without a structured plan.
A well-planned financial plan can lead to dynamic improvements in all aspects of personal finance, providing a more secure and confident financial future. Here’s how planning makes a noticeable difference:
Greater Wealth Planning Results and Higher Savings Rates
Report data is abundant. Having a personal retirement plan was the second most important factor (after education level) tied to higher retirement savings. Both active and retired respondents who had a personal plan in preparation for retirement had more savings. Here is some data:
- 80% of people with a personal plan are on track or ahead of schedule with their money (vs. 39% of people without a plan
- People with a plan are 62% more likely to increase 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 more wealth, with planners saving an average of $1.9 million for retirement, compared to $788,000 for those without a plan.
Planning encourages systematic saving, helping people build more wealth over time.
The Effects of Planning on Higher Levels of Financial Confidence
We hear it from Boldin Planner users every day, planning results with confidence.
“So far, the overall quality of the software is amazing. I can consider all aspects of my financial plan and evaluate different scenarios to trust my plan.”
“It is a competitive tool and even surpasses tools that were previously only accessible to professionals and at a fraction of the cost. It enables the DIY programmer to feel really confident in their system. Thank you very much!”
“It is comprehensive and makes planning very easy. Recommendations and status functions are very useful. The pressure is less and I am confident that there is nothing important to say.”
And, the Goldman Sachs Retirement study provides data to back up this experience. People who have a personal financial plan are more confident in achieving their financial goals. Specifically, 80% of people with a plan express confidence in their retirement outlook, compared to only 42% of those without.
Another study by Fidelity backs this up, noting that people who participate in financial planning are twice as likely to report higher levels of financial well-being.
This improved confidence comes from having a clear road that helps navigate predictable and unexpected financial events, allowing people to make informed decisions.
Improved Financial Results
Those who plan are more likely to experience consistent improvements in their financial situation. Data from Goldman Sachs shows that 62% of people with a financial plan report financial improvement year over year, compared to only 32% without a plan.
Vanguard’s research supports this, noting that people planning for retirement are more likely to set and achieve incremental financial goals, allowing for financial progress year after year.
Planning helps people make better decisions and adapt to changing circumstances.
Better Ability to Navigate Competitive Financial Matters
Managing multiple financial goals at once—such as saving for retirement, paying off debt, and paying for education costs—can be difficult. However, those with a financial plan are better equipped to deal with these competing priorities. Goldman Sachs notes that 43% of planners can effectively manage multiple financial goals, compared to just 35% of non-planners.
Additionally, the CFP Board found that planning helps individuals allocate resources more effectively, ensuring they don’t lose sight of important financial goals.
Early Retirement
Planning not only increases savings but can also help people retire early. According to a study by Goldman Sachs, 61% of people without a plan expect to delay their retirement due to insufficient savings.
However, those who plan are more likely to reach their retirement goals sooner. A study by TIAA found that retirement planners are 45% more likely to retire early than non-planners, thanks to disciplined saving and investing practices.
There are many opportunities for financial growth each year
One of the most important benefits of planning is that it encourages continuous financial growth. Those who have a financial plan are more likely to achieve good financial results each year. A Goldman Sachs survey shows that 62% of planners report year-over-year financial improvement, compared to just 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.
Feeling More Comfortable Managing Money
Finally, financial planning leads to a greater sense of control and comfort in managing money. Data from Goldman Sachs reveals that 40% of planners feel comfortable managing their savings and investments, compared to 16% of those who don’t have a plan.
Research from 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 financial decision making.
Do you have a schedule?
The benefits of financial planning go beyond just increasing wealth. From boosting self-confidence to improving overall financial results, a structured approach to personal finance gives people greater control, security, and long-term success. Planning is the key to dealing with life’s financial problems and achieving a secure future.
Start (or update) your plans with the Boldin Planner.
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