The terms “Financial Planning” and “Retirement Planning” often get used interchangeably. Most people assume these two things are the same, but there are often some MAJOR differences. In this blog, we are going to focus on the key differences  between proactive financial planning early in your career and retirement planning later in life. 

These can be boiled down into 4 key differences:

  1. Time
  2. Investment Strategy
  3. Areas of Complexity 
  4. Primary Goals

Difference #1: Time

Time is THE key factor when it comes to your finances. When you start the planning process early in your career (let’s say somewhere around age 30 or earlier), you have an enormous amount of time to positively (or negatively) impact your financial situation. 

  • You have time to invest.
  • You have time to save.
  • You have time to pay down debt. 
  • You have time to earn more money.
  • You have time to make mistakes.
  • You have time to try different things. 

Compare that to someone who is approaching retirement in the next few years.

  • If you haven’t saved enough or haven’t invested properly by now, you’re in trouble.
  • Any outstanding debt heading into retirement can be crippling. 
  • You are likely capped out on your earning potential and/or your income is decreasing.
  • Any mistakes you make could be detrimental to your retirement plan.

This is why it is so critical to have a plan in place TODAY. You don’t want to be the pre-retiree who is full of regret because they “could have done X” or “should have done Y”. Having financial issues early on in your career is not a major issue (in fact, it is expected). The issue is when you kick the can down the road and do not proactively address your financial situation.

Difference #2: Investment Strategy

Investing for something that is 30 to 40 years down the road is VERY different than investing for something you need in the next few years. We know that over long periods of time, the stock market has been a great place for wealth accumulation. We also know that in the short term, it can get quite ugly. 

There are 2 questions you have to continuously ask yourself about your investments:

  1. What is this money for?
  2. When will I need it?

If the answer to number 1 is retirement income and the answer to number 2 is within 5 years, your investment strategy gets quite complex. You need to try and balance investment growth with current income and do your best to not outlive your money. 

What if the answer to number 1 was still retirement and the answer to number 2 was 35 years? We are now having a completely different conversation. That portfolio is in full blown growth mode and the entire discussion centers around how much money to invest (as opposed to dwelling on what to invest in). If you start early enough and put an optimal strategy together, the conversation in retirement becomes much more enjoyable. 

Difference #3: Areas of Complexity

The difficulties you face surrounding your money as a young professional are vastly different than those of someone preparing for retirement. 

Let’s compare:  

Proactive Financial Planning Concerns:

  • How do I manage a budget? 
  • How much money should I save or invest in various places (i.e. retirement accounts, savings accounts, a home, a business, etc.)? 
  • Which debt should I pay down first? Should I refinance? Should I invest or pay off my mortgage? 
  • Do I need a Roth IRA to pair with my 401k? How do I pick which investment account to invest in first? 
  • Should I use my medical insurance or my spouses’? 
  • What is the best way to fund college for my child?
  • How do I pay less in taxes during my peak earning years? 
  • Do I need short term or long term disability insurance? What about life insurance? 

Retirement Planning Concerns:

  • Am I going to outlive my money?
  • How much will I receive in social security income? 
  • What is a safe amount to withdrawal from my portfolio on a monthly basis? 
  • From where should I withdraw my money? 
  • Where am I going to get medical insurance when I retire? 
  • Do I still need life insurance?
  • What is the best way to leave a legacy for my family? 
  • Is taking a lump sum from my pension a good idea? 

Other than the fact that we are talking about financial topics, there are very few similarities between those two situations.  

Difference #4: Primary Goals

Time to discuss the elephant in the room…Not everyone thinks of retirement as their primary goal! 

This makes the terms “Financial Planning” and “Retirement Planning” laughably different. For a lot of young professionals, the idea of climbing the corporate ladder, hoarding cash for some date in the future, and delaying gratification for a lifetime sounds terrible!

 You may have financial goals that look more like this:

  • Investing in a real estate property 
  • Starting a business 
  • Buying a vacation home
  • Funding a sabbatical 
  • Sending your kids to college 

Those goals may have absolutely nothing to do with retirement. They are more likely aligned with your hobbies, interests, passions, or values. Retirement isn’t for everyone, and that is more than ok. 


Using the terms “Financial Planning” and “Retirement Planning” interchangeably can be a real source of confusion. Commingling these terms often leads to some unfortunate assumptions:

  • You shouldn’t focus on financial planning until you are close to retirement.  
  • Everyone should be focusing on retirement when they are working on their finances.

Ask yourself a few questions when you think about your finances.

  1. How much time do you have to reach your goals? Be specific with the time frame for each individual goal. 
  2. Given the time you have, what will be the investment strategy associated with each goal? 
  3. What financial complexities are you currently facing? Are you able to solve them yourself or should you hire a professional? If you hire someone, do their solutions address your particular needs? 
  4. Do you have primary goals that don’t involve retirement? Think about the advice you receive from various sources. Does that advice align with your unique goals or is it too general? 


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