Estate planningEstate planning. Wealth management. Financial planning. Retirement planning. While there are nuances to each of these terms, it boils down to saving money for the future. In many cases, that means setting money aside for retirement. But the reality is the earlier you start investing, the easier it will be to make those large expenditures you’ll need to make all along the way before you leave the workforce. That is why it is important to start thinking about your financial future early as your life takes its inevitable expected – and unexpected – turns.

Don’t Start Your Journey Without a Map

When you decide to go on an exciting road trip, you don’t just pack the car and leave. You plan for where you want to go, what you want to see along the way, where you’ll stay as you make your journey and how long you’ll be gone. The same is true of financial planning. It is important to think about where you want to go in your life, what you want to purchase, who you want to include on your journey and how you want to live your life. At each stage of your life there are large financial decisions that must be made, so the earlier you start investing for your future, the sooner you will be able to enjoy the rewards of those efforts.

Planning for Financial Independence – Early Career (20s – 30s)

We realize the last thing you are thinking about as you enter your career is leaving it. But retirement isn’t the only reason to save money either. Often inaccurately attributed to Albert Einstein but still a brilliant statement, “Compound interest is the most powerful force in the universe.” For example, assuming a modest 5% average interest rate over 40 years, every $100 you save in your 20s turns into more than $700 by your 60s. Even investing a small amount in your early 20s can make your life so much easier – and enjoyable – as you move through the decades.

Additionally, this is the time of your life where you should embrace the idea of “paying yourself first.” Get into the habit of setting aside a percentage of every paycheck for savings. If you work for a company that has a program for matching your pension contribution, take advantage of it and contribute the maximum amount that they will match (it’s free money after all!). If you don’t have a retirement plan option at your job, do it yourself by setting up an auto-deposit into a retirement account as each paycheck hits. You won’t miss money you never really had, and you will be well on your way to creating a nice nest egg for the future.

During your 20s and 30s, so many exciting things happen to all of us, many of which are made easier when you start saving at a young age. For example, this is the time of your life when you may:

  • Buy your first (and likely second) home and cars
  • Create and add to a retirement account
  • Consider purchasing life insurance
  • Create your first will
  • Start saving for your children’s college education
  • Participate in tax planning for your current situation and the future
  • Take your first big family vacation

Not to sound overly dramatic, but the decisions you make during your early career and family life will determine your financial outlook for the rest of your life. It pays to have someone in your corner who can help you manage your investments, mitigate risk and build assets that will help you reach your short-term goals as well as your long-term dreams.

Growing Your Wealth – Mid-Career (40s – 50s)

As you enter your mid-career (notice we did not say mid-life!), your life gets even busier than you previously imagined. With so many things happening at once, it is easy to take your foot off the accelerator when it comes to financial planning and investments. However, now as you enter your peak earning years, it is more important than ever to review your plan regularly and confirm your goals so your money can work as hard as you do and continue to grow.

As you continue to add to and grow your retirement savings, these are the years where you will also make other expenditures, such as:

  • Vacation home
  • College education
  • Family vacations
  • Life insurance
  • Long-term care insurance
  • Eldercare for aging parents

With so many things changing during this time of your life, including perhaps an inheritance from grandparents or parents, it is important to take a fresh look at your financial plans and determine if your overall goals have changed. And if you started saving early, you will have accumulated a nice nest egg so you can rest easy in the knowledge that your retirement plans are on track, and you have the funds necessary to purchase the items listed above too.

Retiring on Your Own Terms – Late Career and What Comes Next (60s & beyond)

At this point, hopefully, you have properly allocated assets toward a comfortable retirement but have also set aside funds to support your children and aging family members as well as plan for your estate.

This is the time when those that own businesses need to determine how they want to deal with succession. Do you want to sell your business to a competitor or investor? Would you prefer to pass it along to your children or grandchildren? Or are your employees interested in taking it over for you? Whatever your preferred path, it takes a good deal of thought and planning to move on from your life’s work, ensure that you get the most from your investment and preserve the wealth you have built over years of hard work.

And just because you have retirement in your near future, we realize that looks different for each person. While some completely embrace the quieter life leaving the workforce brings, others see this as an opportunity to pursue a new career, volunteer for the causes they hold dear, or even pursue a long-held passion.

As the time comes to start pulling from your retirement savings, it is also important to think about what you will do in terms of:

  • Adjusting spending to prepare for retirement
  • Setting money aside for grandchildren
  • Downsizing or changing where you live
  • Reviewing insurance policies to make sure they are sufficient
  • Enhancing your tax planning
  • Ensuring you have made appropriate elder care plans

No matter what your “retirement” looks like – and there is no right or wrong way to do it – you need to have a plan in place that ensures you get to do it your way, focusing on enjoying your best life and not worrying about how you will pay for it.

When was the last time you reviewed your financial plans? If the answer is “never” or “it’s been a long time,” we can help. We developed the perfect tool to use at all stages of your life called the Personal Net Worth Binder. This is a great way for you to take a systemic approach to your long-term financial planning, to record what you would like to accomplish in each stage of your life and gain an understanding of the impact various decisions have on your family’s financial well-being. Here’s how it works:

  • The Map: We will review all your information, look at your current saving strategy and develop a financial plan which includes the products and services you need to achieve your objectives.
  • The Action Plan: Once we have mapped out where you are and where you want to go, we can create a list of steps necessary to implement the plan and track your progress.
  • Follow Up & Monitoring: Nothing in life is guaranteed, so we will continuously monitor and measure your progress towards your goals, and with your input, make the required adjustments when necessary.

What do you want your future to include? How do you envision your ideal financial future? If creating your own Personal Net Worth Binder sounds interesting to you, we would love to tell you more about the benefits it has provided to others and how it can help you as well. Reach out to me for a no-obligation conversation to see how we can help you plan for today and tomorrow so you can live your best possible life.