One-Page Financial Plan - what is it and how can it help with retirement planning?
Updated: Dec 27, 2022
The one-page financial plan (OPFP) first came to prominence when U.S. based financial planner Carl Richards released his second book, The One_Page Financial Plan, in 2015. The OPFP enables you to distil your goals and action points into a concise format. This (hopefully) means you are more likely to revisit the OPFP and keep it updated than if it were a sprawling 100-page financial plan with numerous cashflow extracts. That's not to say that these don't have a place in retirement planning, but the OPFP should summarise the high-level details on one sheet of A4 and be the most visited reference.
Where does the OPFP fit in the retirement planning process?
The OPFP exists to put financial planning at the front and centre of the retirement planning exercise and is a reminder of what you are working towards. Much like financial planning, the OPFP is not a one-off exercise and should be updated whenever your circumstances change, for example, moving jobs. The OPFP should be specific to you - it's probably going to contain very different information when compared to your neighbour or friend (assuming they have one!). Along with a financial plan, the OPFP enables you to monitor whether you are on track and what you might need to adjust to get you back on course.
Example: Mark and Rebecca Jones
The format and contents of OPFPs differ, but to help bring the concept to life, I will use Mark and Rebecca Jones as an example. Those that have read 'Planning for Retirement: Your guide to financial freedom' will be familiar with their story, but for those that haven't, a quick summary is below:
Mark is 52 and has been working for various pharmaceutical companies since leaving University and now works at ABC Pharma as a product manager. His wife Rebecca is 49 and gave up her job to look after the children, John, 15, and Sarah, 13. Mark is tired of corporate life and would love to escape to something a bit less stressful and rewarding but has not yet decided whether that will be paid or voluntary employment. He wants to retire from his current role within the next year. Mark and Rebecca plan to purchase a second home in Devon, where they have enjoyed many family holidays over the years, selling their current home to fund this. They intend to pay for John and Sarah's university education should they choose to go. After that, they would like to make periodic gifts to the children, for example, to help them on the housing ladder, assuming they can afford it financially.
Extracts from their financial plan are shown below:
Below is their OPFP.
A few things to note from Mark and Rebecca's OPFP:
Goals: These are clearly defined. For example, the first goal is for Mark to retire next year. They aim to have a net retirement income of £24,700 in the early years and £18,100 further down the road.
Current position: This summarises the balance sheet and income and expenditure. The information is usually updated from the underlying cashflow plan periodically.
Action items: Much like goals, these are clearly defined. For example, the first action point is for Mark and Rebecca to stress test their financial plan now to ensure it's realistic for Mark to finish work in a year.
Want to find out more
If you would like to find out more about creating an OPFP or retirement planning in general, please schedule a free, no-obligation call.
Noel Watson and the team at Pyrford Financial Planning are Independent Financial Advisers based in Weybridge, Surrey. We specialise in retirement planning and provide pension advice, investment advice and inheritance tax advice.
Our office telephone number is 01932 645150.
Our office address is No 5, The Heights, Weybridge KT13 0NY
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Although best efforts are made to ensure all information is accurate, you should not rely on this blog for your personal situation or planning.
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