Financial Steps to Consider at Any Stage in Life

As you enter a new year or decade of your life, your financial to-do list is constantly evolving with you. While your 20’s and 30’s may be filled with many “firsts” and a focus on building wealth, your 40’s, 50’s and beyond may be more focused on preserving your assets with a keener emphasis on saving for retirement.

However, not all financial goals or to-do items should be tied to one specific decade. Saving for retirement is not something to contain within just a few years—but rather a goal to stretch across decades of your life. Additionally, while you may purchase a life insurance policy or create an estate plan in your 20’s, these (along with many other items) should not remain untouched for the remainder of your life. Be prepared to consistently review whether what you have put in place still makes sense for your personal and financial situation, or if changes should be made.

Below is a non-comprehensive list of financial steps to consider throughout various stages of life. To discuss these or any other topics not included below, contact your financial advisor.

In your 20’s and 30’s:

Create a budget you can stick to.

Creating a realistic budget that you are able to adhere to is a difficult task. Developing a budget early on is necessary in order to form good habits and be productive with your money. A few quick tips for getting started: be realistic, account for all expenses (not just the recurring expenses), and be willing to adjust along the way. Other items to include:

• An emergency savings fund. Commonly referred to as a “rainy day fund,” this can provide some relief in the event of an unexpectedly large expense, such as a medical bill, car repair, sudden layoff from a job, etc. The amount you aim to have saved will differ based on your personal situation but typically at least three to six months’ worth of expenses is recommended.
• Paying down debt. Paying off debt, whether it’s a large credit card balance, outstanding student loans, etc., is a major obstacle that requires both preparation and dedication. Work your monthly payments into your budget in order to stay on task and prioritize the debts charging the highest interest rates.
• Investing. The early stages of your career are the perfect time to become familiar with investing. Get started by saving for retirement in a 401(k), IRA, or another investment account. Make informed choices about the investments you select for your plan by consulting with your financial advisor. An advisor can also explain and educate you on different types of accounts and their characteristics, as well as helping align your investing strategy with your other financial goals.
• Include longer term goals. Do you have dreams of purchasing a house, going back to school, or taking a big family vacation? Factor these larger goals into your budget as well. If you’re aiming to save $X amount towards a goal by a certain date, divide that amount by the number of months remaining and include that number in your monthly budget. For example—if you want to save $15,000 for a down payment on a house over the next 12 months, you’ll need to save $1,250 a month.

Utilize your employee benefits and get insured.

If your employer offers an employee benefits package, understand your options and make the most of what is available to you. Your financial advisor can help you identify whether the options offered are sufficient for you or if additional coverage is recommended. Procrastinating purchasing insurance, whether it’s health, life, or disability insurance, may seem tempting when you’re young, healthy, and employed. However, obtaining coverage can give you peace of mind, help mitigate risk, and potentially be less expensive than it could be if you waited. Lastly, if your employer offers a 401(k) match, take advantage of it! If you don’t have an employer-provided retirement plan, talk to an advisor about setting up a personal retirement account. Get an early start on your retirement savings to allow your money plenty of time to grow.

Make adjustments if your family grows by marriage, children or both.

Whether you get married, have children, or both, there are several financial considerations to make with a growing family:

• Update your beneficiaries and policies as needed. This may include updating insurance policies, estate planning documents, and so on. If you don’t already have an estate plan, marriage or children are the perfect motivation to start now—work with your financial advisor and tax and legal professionals to get started.
• Choose how or if to combine finances with your spouse. Discuss with your spouse how or if to combine your finances in order to effectively manage both shared and individual expenses. Determining this early on is especially important when adhering to a budget.
• Start saving for your children’s college education. Saving for your child’s college education at a young age may seem premature—however, with the rising costs of college, planning ahead has become a necessity. Evaluate the available options, as well as how much you’re willing to contribute, how you’ll save for college while contributing to other financial goals, and other key questions.

Start working with a financial advisor.

There are multiple reasons to start working with a financial advisor. As your financial picture grows increasingly more complex, bringing in a professional can provide guidance, expertise, and accountability when you need it most. Whether you have a specific topic you’d like another opinion on or you’d like guidance on your financial strategy as a whole, a financial advisor can provide you with valuable input and insight.

In your 40’s and 50’s

Review retirement accounts and adjust contributions.

Review your retirement accounts on a regular basis to determine if your savings are on track and if your contributions could be increased. Keep in mind the annual limitations on contributions to 401(k)s—in 2017, $18,000 for those under 50 and $24,000 for those over 50.¹ If you have 401(k) plans with past employers, discuss with your advisor on how to best deal with these. Your options include leaving the account where it is, rolling over to your new employer, rolling over to an IRA, or taking a cash distribution. Additionally, as you approach your 50’s and 60’s, put yourself and your future retirement first. While you’ll undoubtedly have other responsibilities to cater to, prioritizing your own goals is especially important as you inch closer to retirement.

Review your estate plan.

Contrary to popular belief, estate plans are not just for the wealthy or retired. If you haven’t done so already, work with your financial advisor as well as your tax and legal professionals to develop a plan appropriate for you. For those with an estate plan in place, be sure to regularly review it in order to ensure the accuracy of the plan, including updating beneficiaries as necessary.

Consider future caretaking responsibilities.

Whether it’s aging parents or kids moving home from college, anticipate the potential toll that caring for your loved ones could take on your financial goals. While it may be an uncomfortable conversation to start, discuss with your parents their long-term health care options and any preparations that they have put in place. Caretaking responsibilities often come with little notice, however, preparing ahead of time can allow you to stray less from your own financial goals.

Evaluate your own long-term health care options.

Your 50’s are the perfect time to evaluate your own long-term health care needs. A critical component of your retirement strategy involves factoring in how long you may live and how long your money will last. By putting a plan in place ahead of time, whether through long-term care insurance or another savings vehicle, you can lessen the risk of having the burden of future care costs fall on your loved ones or come out of your retirement savings.

In your 60’s and beyond

Determine what retirement could consist of for you.

Retirement consists of something different for everyone. Whether you choose to keep working, take on a different or less demanding role at work, spend more time at home with family, or spend time volunteering, consider what retirement will look like for you. Reflecting on your options ahead of time can help you more accurately prepare your financial strategy.

Map out your retirement income.

As retirement edges closer, do you know where your money will come from? Consult with your financial advisor to map out where your income will stream from throughout retirement. Throughout the process, also work with your advisor to arrive at a budget fit for you. Within your budget, include any upcoming larger items, such as contributing to a grandchild’s college education. Regularly assessing your budget is necessary whether you’re still several years out from retirement, about to retire, or well settled into retirement.

Keep important dates and options in mind.

Keep a calendar of several important dates to keep in mind for the year, such as open enrollment for Medicare, Required Minimum Distributions (RMDs) upon turning age 70 ½, and so on. For those required to take an RMD with more cash flow than necessary at the moment, you may consider a tax-free Qualified Charitable Distribution (QCD) to contribute to a qualified charitable organization directly from your IRA. Another similar option would be to take the RMD as usual and then direct the funds to a donor-advised fund (DAF) of your choice. The advantage to this would be that you would still receive a tax deduction within that calendar year for any contributions made to the DAF, yet you can allow the funds to invest and wait to make a larger donation all at once.

Throughout the course of your life, there will be multiple financial challenges and opportunities to navigate. To help you with the items detailed here as well as other topics you may have questions on, contact a financial advisor. Find someone in your area here.

Written by North Star Resource Group.

Financial Advisors do not provide specific tax or legal advice.  This information should not be considered as specific tax or legal advice. You should consult your tax or legal advisor regarding your own specific tax or legal situation.

North Star Consultants, Inc. - Insurance Products and Services. CRI Securities, LLC – Securities and Investments. Securian Financial Services, Inc. - Variable Products and Securities. North Star Resource Group offers securities and investment advisory services through CRI Securities, LLC and Securian Financial Services, Inc. CRI Securities, LLC is affiliated with Securian Financial Services, Inc. Members FINRA/SIPC. North Star Resource Group is not affiliated with Securian Financial Services, Inc. North Star Resource Group is independently owned and operated. North Star Resource Group| 2701 University Ave SE | Minneapolis, MN 55414. 1866308 / DOFU 08-2017

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