World Financial Planning Day falls on October 2nd, making it a great time to evaluate your financial health. No matter where you are on your financial journey, having a solid financial planning roadmap is key to reaching your goals. From your 20s to your 50s and beyond, each phase of life comes with new financial stops and important decisions to be made. Explore the various phases of your financial planning roadmap and the actions you can take within each stage to secure your financial future.
Starting Out (20s – 30s)
The first phase of your financial planning roadmap covers your 20s and 30s, focusing on building a foundation for a solid financial future with budgeting, saving, and planning for future financial goals like buying a home or starting a family. There are a few key steps you should take during this phase, including:
- Build an emergency fund with 3-6 months of living expenses. Even minor unexpected expenses can significantly impact your finances if you’re unprepared!
- Start contributing to retirement accounts like a 401(k) or IRA to benefit from compound interest. Take advantage of your employer’s 401(k) match if offered. There are quite a few options available when it comes to saving for retirement, so sit down with your financial advisor to review the specifics to make the most of your money.
- Pay down high-interest debt, such as credit cards or student loans to improve your credit and minimize your total amount paid over time.
- Set financial goals, such as saving for a home or future family needs. Having goals allows you to track your progress and adjust your financial actions as needed.
Building Wealth (30s – 40s)
The next stage of your financial roadmap takes place in your 30s and 40s and is all about growth and building on the foundation you have already set. Whether you are focused on career advancement, saving for a home, or planning for your family’s financial future, this phase is a critical time for making smart financial moves and fine-tuning your financial goals. During this stage, you should:
- Maximize retirement contributions and take full advantage of employer matches. As you advance in your career and your annual earnings increase, you may be able to make additional contributions to your retirement fund, further securing your and your family’s financial future.
- Diversify your investment portfolio to balance growth and risk. Consider stocks within different industries, bonds, real estate, and other investment opportunities to improve your portfolio. You never want all of your eggs in one basket!
- Set up or review life insurance to protect your family’s financial future. It is important to have a plan in case anything happens to you and your loved ones unexpectedly.
Preparing for Retirement (50s – 60s)
In your 50s and 60s, it’s time to focus on securing your financial future and preparing for retirement. Whether you are paying off your mortgage, planning for healthcare, or making the final push toward your retirement savings goals, this stage is all about making sure you’re set for the years ahead. This phase of your financial roadmap is the time to take charge and fine-tune your retirement strategy to make sure everything is in place. We recommend:
- Increasing retirement contributions and using catch-up contributions if applicable.
- Paying off large debts, like mortgages, to reduce expenses in retirement. This leaves more money for the things you want to do!
- Reviewing and updating your estate plan, including your beneficiaries.
- Planning for Social Security and other income sources in retirement.
Following this checklist will help you confidently prepare for your next chapter!
Living in Retirement (60s+)
The last stage featured on your financial planning roadmap is living in retirement through your 60s and beyond. This phase is about enjoying the life you’ve worked so hard to build while ensuring your financial future remains secure. To best enjoy the rewards of your hard work and maintain your lifestyle with minimal financial stress:
- Develop a withdrawal strategy to ensure your retirement savings last. You don’t want to run your savings dry within the first few years!
- Manage your investments to align with your income needs and risk tolerance.
- Monitor your healthcare and long-term care costs, ensuring you have adequate coverage for the care you need.
- Review and update your estate plans periodically to protect your financial legacy.
Stay connected with Blakely Financial as we continue to provide the guidance you need at every stage of life for a prosperous financial future.
