You're Never Too Young to Start a Financial Plan

PLANNING IN YOUR 20s The biggest mistake that you can make at this stage is to not begin.

Get focused. Want to retire at 40? Save $1 million dollars? Save for your kids’ college? Once the future goal is established, we work backward to create the strategy for today.

Save early and often. Time is truly of the essence at this stage due to compounding (Einstein called this the eighth wonder of the world.) And it works two ways, so don’t forget to attack student loans hard.

Understand your risks. Life happens, so we must be protected through life, health, income and auto insurance, especially as you start a family.

FINANCIAL PLANNING IN YOUR 30s This is often a time 30s of great change with job opportunities, or starting a family. Formal planning becomes important.

Ramp up savings and clean up debt. There is still plenty of time for compounding, and a systematic approach to saving can be very effective.

The Tax Man Cometh. With two incomes likely, ensure that more of your hard earned dollars stay in your pocket and not Uncle Sam’s by using tax-deferred retirement accounts like 401Ks and IRAs.

Job change. Better to roll over your company savings than to spend it. Retirement is on the horizon!

FINANCIAL PLANNING IN YOUR 40s Sandwiched between 40s aging parents and growing children, this decade brings the reality of long-term responsibilities clearly into focus. Planning becomes urgent.

Transfer risk. Now is the time to make sure your insurance plans are in place to carry you through to the end. Legal documents such as wills and powers-of-attorney are crucial.

Pay it off. Zero balances at the first of each month gives you freedom and flexibility, and allows you to save more.

Peer into the future. Update (or create) your financial plan now to focus the lens of retirement, which is now in full view.

FINANCIAL PLANNING IN YOUR 50s This milestone decade 50s provides a reprieve from college funding, raising children and hopefully a mortgage, but is often offset by aging parent care. Retirement is now firmly centered in the crosshairs.

Clear the nest. Cutting the financial cord to the kids will not only improve your retirement planning, but will foster financial independence with your children as well.

Consider your health. Chronic health issues tend to sprout about now, and longterm care insurance is a crucial patch to a potentially disastrous financial strain from an unexpected nursing home stay down the road. Get it now while you’re healthy and it’s affordable.

Catch up. Once you hit 50, higher “catch up” contributions can be made to IRAs and many other retirement plans.

FINANCIAL PLANNING IN YOUR 60s Now the big question 60s has finally arrived: How much is enough, and when can I call it quits?

Consider your spending. This is not the time for guessing; better to track your monthly expenditures for a few months to get a handle on how much income will actually be needed. A housing downsize may be prudent.

Cash (flow) is king. Now the trick is to devise a distribution strategy from your investments that fills the gap.

Think long term. Expect a 30-year, two-person retirement. Chances are very good that at least one of you will make it to 95 or beyond so each year of postponement allows for additional compounding and one less year to fund in retirement. Consider part-time work.