Advice for All Stages

Recent Graduates / Early Career
Typically in your 20’s

Cash Flow: 

  • Allocate at least 20% of your gross income to long-term savings and / or paying off debt.  Now is the time to get money invested so it can compound.
  • Start identifying spending habits and patterns by creating a budget or trying out the WholeWallet30.

Tax Planning: 

  • For many during this stage, it makes sense to save to a Roth versus pre-tax retirement vehicle since starting salaries tend to be lower than in mid / late career.  

Investments: 

  • Invest in extra schooling now if you think you will need it.  Life has a way of getting more complicated, making it harder to go back to school down the road.
  • Educate yourself on how to invest.  Read financial blogs and whitepapers or hire a fee-only financial planning professional to make sure you get started on the right path.  

Insurance: 

  • Make sure you obtain renter’s insurance if you are renting an apartment.  
  • Obtain disability insurance.

Estate Planning:

  • Create at least an advanced health care directive, power of attorney financial and will.  You may not even have to visit an attorney if your situation is simple enough.
Early – Mid Career
Typically in your 30-40’s

Cash Flow: 

  • You may feel overwhelmed during this time, whether it is from having young children or working long hours as you move up the corporate ladder.  Start outsourcing.  For example, pay a house cleaner or someone to help with the garden, even if you won’t do this forever.  You need to survive this “crunch time” without sacrificing personal relationships and your work performance.
  • Resist trying to live a lifestyle you cannot afford.  Many people work for decades before being able to take annual trips to Europe or eat at expensive restaurants.  Bgrateful for what you have accomplished so far, and focus on living within your means.

Tax Planning: 

  • Make sure you are taking advantage of your employee benefits (many of which have tax benefits). 
  • If you are self-employed, look at your tax-deferred benefits with a fee-only financial planner or your tax professional.  

Investments: 

  • Stay on top of your portfolio.  Re-allocate at least annually and make sure you are investing new savings (versus forgetting about it and leaving it in cash).  

Insurance:

  • Revisit life insurance.  You likely need more coverage now than when you were in your 20’s, especially if you have someone who is dependent on your income.

Estate Planning:

  • It is likely a good time to meet with an attorney now and update your estate planning documents. Together, you can decide if it makes sense to create a living Trust.
Mid / Late Career
Typically in your 40-50‘s

Cash Flow: 

  • Continue to track household expenses.  
  • Calculate if you are on track for retirement.  If not, adjust your savings strategy now before it is too late to change course and you end up working longer than desired.

Tax Planning: 

  • You may find it makes more sense to save to pre-tax retirement accounts versus Roth accounts now as your income rises.  Do an analysis on your current and projected retirement tax bracket.

Insurance: 

  • See if it makes sense to get long-term care insurance at this time or if you want to plan on self-insuring.
  • Revisit liability insurance.  You have likely done a good job of accumulating assets – now make sure they are protected.

 Estate Planning: 

  • If you find yourself getting married, divorced, or re-married, engage an attorney to be clear on separate versus community property.  
  • Have your estate planning documents reviewed every 5 years to account for changes to the tax code
  • Check your beneficiaries and the titling of your accounts to make sure they are in line with your intent.

Family Finances: 

  • Teach money skills to children, nieces and nephews.  Involve them in the financial decisions you are making, such as whether to refinance a loan, or have them attend a meeting with your financial advisor.  
Retirement / Financially Independent
Typically in your 60’s+

Cash Flow:  

  • As you move into retirement, conduct an analysis to determine when you should begin taking social security benefits.
  • Develop a portfolio distribution strategy.

Tax Planning:  

  • See if it makes sense to do Roth conversions between the period you retire and the year you receive social security income.

Investments:

  • Outsource financial planning and investment management now if you haven’t already.  The risk for dementia increases as you age.  You want to have a plan in place before this happens.
  • Explore the opportunities afforded to seniors in your area for free or inexpensive learning. For example, in the San Diego area, there is Osher Institute and Oasis.

Insurance: 

  • Create your aging plan.  Decide if you want to age in place or make some modifications to your home to make it more livable.

Estate Planning:

  • Communicate your wishes to your family in the event something happens to you.
  • Notify family where they can find your estate planning documents, safe deposit box key, or anything else that is pertinent.
  • Don’t forget about your “digital” estate plan. Make sure usernames and passwords are safely stored and available for family members that may need them.

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