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    The Decades of Financial Planning

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    In Your 20s - Getting Started

    You've secured your first job, and while your first instinct may not be to save your money for retirement, it's never too early to begin thinking long-term. You may not be making a lot of money now, but you do have a lot of time, and that's invaluable. Now is the time to learn the importance of living within your means, establishing good credit and getting a jump on those retirement savings.

    Don't let a smaller income keep you from establishing the basics. Here are six things to focus on in your 20s:

    • Create an emergency fund. The basic rule is to set aside enough cash to cover three to six months of expenses, should you unexpectedly lose your job. Keep this money in a safe, relatively liquid account like a short-term CD or money market fund.
    • Start contributing to a retirement account. If you can manage it, try to begin with 10%. If you stick with 10% during your working years, you'll likely be in good financial shape come retirement. At this point, a Roth 401(k) probably makes more sense than a traditional 401(k) or IRA.
    • Minimize credit card debt. Charge only what you can afford to pay off each month.
    • Make your student loan payments on time, every month. Roughly 70% of those who have graduated college since 2012 have student loan debt, at an average of $29,400. You don't want to skip out on these payments because that will negatively affect your credit score. A strong credit history is essential when you're ready to purchase a new car or your first home.
    • Enroll in comprehensive health insurance. If your employer doesn't offer medical benefits, shop around for the best plan. Good health coverage is a must, no matter your age.
    • Create smart financial habits. Make a budget to make sure you are not living outside your means - and stick to it. Also, do yourself a favor by setting up automatic payments for savings and regular bills.

    In Your 30s - Increasing Responsibilities

    For many people, financial responsibilities start to increase in their 30s. This includes marriage, kids, homeownership and retirement. All of these new responsibilities are easily manageable if you prioritize.

    • Get your debt in check. Carrying credit card or other high-interest nondeductible debt is one of the biggest mistakes you can make. Not only are you wasting your money on a potentially high interest rate, but you're also hurting your ability to borrow money at a reasonable rate in the future.
    • Focus on your savings. If your employer offers a retirement contribution match, make sure you are taking advantage. If you didn't begin in your 20s, see if you would be able to up your savings goal to 15-20% of your annual salary. After that, you can direct your savings toward a home down payment, child's college education or another long-term goal.
    • Invest for growth. Don't just put money away - put it to work. Open investment accounts and choose investments that offer you an opportunity for growth. Investing doesn't have to be complicated, and our Wealth Management & Trust department has financial advisors who can help get you started.
    • Review investment portfolio performance annually. Make sure your asset allocation is in line with your risk tolerance and goals.
    • Protect yourself and your family. Now that you have dependents, it's time to look into disability and life insurance.
    • Start your estate plan. At the very minimum, you should establish a will that names a guardian for your children. You should also make sure you name beneficiaries for all retirement accounts, as these designations will take precedence over your will.

    In Your 40s - Accumulating Assets

    Your salary may be growing, but so are the financial pressures: family, bills and on and on. It's easy to get distracted, but you have to stay focused - now more than ever.

    • Double down on savings. No matter what, keep retirement at the top of your priorities. If you haven't started saving, try setting aside 25% of your salary. It's a big chunk of money, but it only gets more difficult if you wait.
    • Create a net worth statement. Having a net worth statement that lays out your assets and liabilities will give you a "big picture" perspective of your finances as well as a benchmark against which you can measure your progress. You can use our MoneyLink product that will help you automate your net worth statement.
    • Take a fresh look at your long-term goals. These may include a second home or early retirement. Crunch the numbers to see what it will take to reach these goals.

    In Your 50s - Peak Earning Years

    As you approach the peak, it's smart to start looking at the other side. Retirement may be 15 or more years away, but it's not too early to focus on specifics.

    • Estimate retirement expenses and income sources. Will you move to a new home or a new community? Travel? Work part time? Whatever you envision, it likely takes money. So back up your plan with real numbers, and be sure to factor in Social Security benefits. It may mean that you need to increase your savings to make sure you can live comfortably when you are ready to retire.
    • Stay on top of your portfolio, focusing on performance, risk and expenses. Review your investment portfolio and decide if or when you should shift to a more conservative asset allocation.
    • Know your tax profile. Understand how taxes fit into your financial picture, now and in the future.
    • Consider long-term-care insurance. Now's a practical time to think about it. 
    • Update your estate plan. Make sure your will and beneficiaries are up to date and your assets are appropriately titled.

    In Your 60s - Preparing for Retirement

    It's time to focus on the details of your life after work.

    • Decide when to take Social Security. Many people file for Social Security too early, leaving thousands of dollars on the table. Remember, the longer you wait up to age 70, the bigger your check once you begin collecting - so it pays to do some calculations.
    • Sign up for Medicare. Unless you're still working, you must sign up by age 65 or face a penalty under certain circumstances. Medical costs can be a big part of retirement expenses, so look into a supplemental policy as well.
    • Fine-tune your retirement income plan. Review your projected expenses, add up your reliable sources of income and figure out how your portfolio will cover the gap. Consider gradually moving to a more conservative asset allocation, but don't walk away from growth - retirement can last a long time!

     

    The road to financial well-being lasts a lifetime. We are here to help you figure out your unique plan. Contact one of our Financial Advisors today!