GOLDEN VALLEY, Minn. - As we begin the transition into a new season, it serves as a great reminder that our financial plans should also change as we go through the different stages of life.
Justin Halverson with Great Waters Financial stopped by the KARE 11 News at 4 with a 5-point check list to ensure our plans match up with our age and goals.
Just Starting Out (20-somethings)
Recent college grads or those who have just secured their first job are really just getting their financial footing underneath them. One of the biggest mistakes young investors can make though is not investing at all. When you’re young, time is on your side. Here are items young investors should put on their checklist:
- Create a budget that fits your new income
- Pay down debt (start by prioritizing credit card and other high-interest loans)
- Start saving for retirement – enroll in employer sponsored programs and take advantage of any company match. Also, consider opening a 401(k)
Building Your Wealth (30’s and 40’s)
As you become established in your career, growing your wealth should be one of your top priorities. There are also other things you should consider during these years in order to properly prepare for your future. Here’s a checklist for those established in their careers:
- Max out retirement contributions – now that you’re making more, make sure you’re contributing as much as possible to your IRA and 401(k)
- Be proactive in tax planning – Work with a financial professional to maximize your deductions since this will most likely be the time you will be paying the highest taxes.
- If you’re taking care of aging parents, consider how this plays a roll in your overall financial plan
- Same goes for your child’s education expenses – create a game plan for how you plan to pay for their education without breaking your bank.
Pre-Retirees (50’s and 60’s)
As you approach retirement, there are proactive planning steps you should take to make sure your golden years are smooth sailing. These include:
- Consider long-term care plans – investigate traditional long-term care insurance, which would provide nursing home care, home-health care and other types of personal care for people over 65.
- Begin planning your retirement income – Work with a financial professional to get a game plan on how to turn your savings into income in retirement. This should include your game plan for filing for Social Security.
- Catch up on retirement contributions – if you’re behind of building your nest egg, at age 50 you can start contributing higher amounts to your 401(k) and IRA.
Once you’re in retirement, you can kick back and relax. But before you completely forget about your financial house, make sure you keep up on the following items:
- Know your budget – everything comes full circle – just like those who are just starting out, retirees should also have a firm grasp of what their income and expenses will be in retirement – you don’t want any surprises once you’re no longer working.
- Keep your estate plan updated – keeping your estate plan updated, especially when you go through life changes like becoming a widow is crucial in this stage of life.
- Review your investments – Once you’re in retirement, your risk tolerance changes. Make sure you’re not exposed to too much risk so you don’t suffer a big loss during retirement.