The economy is improving and inflation is under control, so why do so many of us still feel financial pressure and concerns about a secure future? New research from the Goldman Sachs Retirement Survey & Insights Report, 2024 find that planning is the missing link for many households. The study finds that having a written (digital) financial plan results significant positive impacts. Let’s explore.
Financial Planning is the Missing Link to True Financial Security
Most people work, earn money and make financial decisions that impact how their income is allocated in the near-term. These might be considered the first links in a chain of financial planning actions. Many also have goals for their future – retirement, kids, travel, and more – and these are the ending links in the chain.
In between the start and the end of the chain is planning. It is a simple habit that has a HUGE positive outcome.
Planning is the link that connects what is happening in your life today to what you want to happen in the future.
Why Planning Works
While many individuals are diligent about saving, they often fall short of their goals without a structured plan.
A well-structured financial plan can lead to transformative improvements across multiple dimensions of personal finance, offering a more secure and confident financial future. Here’s how planning makes a tangible difference:
Planning Results Greater Wealth and Higher Savings Values
The report’s data is overwhelming. Having a personalized plan for retirement was the second most important factor (behind education level) tied to higher retirement savings. Both working and retired respondents who had a personalized plan when preparing for retirement had more savings. Here is some data:
- 80% of people with a personalized 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 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 more wealth, with planners saving an average of $1.9 million for retirement, compared to $788,000 for those without a plan.
Planning encourages disciplined savings, helping individuals build substantial wealth over time.
Planning Results in Higher Levels of Financial Confidence
We hear it from Boldin Planner users everyday, planning results in confidence.
“So far, the comprehensive nature of the software is amazing. I can factor in all aspects of my financial plan and test different scenarios to have confidence in my plan.”
“It’s a tool that rivals and even exceeds the tools previously only accessible by the pros and for a fraction of the cost. It empowers the DIY planner to really feel confident in the their plan. Thank you so much!”
“It is comprehensive and makes planning very easy. The recommendations and scenarios functions are extremely helpful. I stress less and have confidence that I’m not missing anything important.”
And, the Goldman Sachs Retirement research provides data to back up these experiences. Individuals with a personalized 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 just 42% of those without one.
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 both predictable and unexpected financial events, allowing individuals to make informed decisions.
Improved Financial Outcomes
Those who plan are far more likely to experience consistent improvements in their financial situation. Goldman Sachs data shows that 62% of people with a financial plan report year-over-year financial improvement, compared to only 32% without a plan
Vanguard’s research supports this, noting that people who plan for retirement are more likely to set and achieve incremental financial goals, allowing for steady financial progress year after year.
Planning helps individuals make better decisions and adapt to changing circumstances.
Better Ability to Navigate Competing Financial Priorities
Managing multiple financial goals simultaneously—such as saving for retirement, paying down debt, and covering educational expenses—can be overwhelming. 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 just 35% of non-planners.
Additionally, the CFP Board found that planning helps individuals allocate resources more efficiently, ensuring that they don’t neglect essential financial objectives.
Earlier Retirement
Planning not only increases savings but can also help individuals retire earlier. According to the 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 study by TIAA found that retirement planners are 45% more likely to retire early compared to non-planners, thanks to disciplined saving and investing practices.
More Likely to Improve Financially Year-Over-Year
One of the most important benefits of planning is that it fosters continuous financial growth. Those with a financial plan are more likely to experience positive financial outcomes each year. The Goldman Sachs survey shows that 62% of planners report financial improvement year-over-year, 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. Goldman Sachs data reveals that 40% of planners feel comfortable managing their savings and investments, compared to just 16% of those without 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 Plan?
The benefits of financial planning extend far beyond just increasing wealth. From boosting confidence to improving overall financial outcomes, a structured approach to personal finance offers individuals greater control, security, and long-term success. Planning is the key to navigating life’s financial complexities and achieving a secure future.
Get started (or update) your plans with the Boldin Planner.