When it comes to your financial life, although every year is important, be sure to pay attention to pivotal years and turning points. Below we review 5 important years of your financial life and what you need to focus on.
At age 25, you have likely completed your college and/or master’s education and have landed your first “real” job. As you grow accustomed to your new salary, it is a good time to start developing key financial habits to carry with you through your working career. You may be juggling various goals like paying off student debt, saving for a house down payment, and making contributions to a retirement savings plan. Target setting aside 10-15% of your salary for retirement from the get go and establish a debt repayment and savings plan. Also, your greatest asset is most likely your ability to earn an income for the next 40 years. Be sure to protect your income with proper disability insurance coverage.
At age 45, you may be entering the height of your earning years making it a good time to put more emphasis on saving for retirement. If you have an employer sponsored retirement plan, target maximizing contributions to the plan each year. If you are self-employed, talk with a Financial Planner to review your options for establishing your own retirement plan. At this age, your family may be growing and it is important to periodically confirm you have adequate life insurance and disability coverage. Your children may also be getting close to starting college – do you have a savings plan? Are you on track?
At age 55, retirement may be just around the corner. Before you exit the work force, put together a plan for the next phase of your life. You know exactly what you are retiring “from” but what are you retiring “to”? A financial planner can assist in evaluating if you are on track or if adjustments need to be made in order to achieve your goals. Do you need to save more, work longer, or adjust your investments? Your mid 50s is also a good time to start learning about the various long term care insurance policies available and considering if such a policy fits within your overall plan.
At age 65, you may no longer be covered under employer health insurance, which means you will need to sign up for Medicare. It is important that you enroll prior to your employer coverage ending to ensure that you have no gaps in coverage and to avoid late enrollment penalties. Once you have attained age 65, you should also refer to your county website to find out if your county has a Senior Property Discount program. As you transition into retirement, periodically review variable expenses and determine if your spending is consistent with your retirement planning goals.
At age 70, it is good practice to do some tax planning prior to turning 70 ½ when you will be required to start distributing funds from your Traditional IRAs and any employer retirement plans that have not been consolidated to an IRA. If you delayed collecting Social Security benefits, contact Social Security to begin receiving your benefits – there is no benefit to waiting beyond age 70 to start collecting. Lastly, as difficult as it may be, take the time to start fine-tuning your estate planning and talking to your kids about your will.
No matter your age, it is never too soon or too late to meet with a financial planner to review practices for building a strong financial foundation for any stage of life. Call Sharkey, Howes & Javer at 303-639-5100 to set up a complimentary consultation with a CERTIFIED FINANCIAL PLANNER™ professional.