Financial Advisor Jacqueline Battista guides us on financial planning at every life stage.
Just like there are four seasons in a year, there are different seasons of financial planning during a lifetime. For each season you need to prepare in a different way – sometimes with pulling out the wool sweaters and other times breaking out the swimsuit. Just like seasons, it’s important to know what to expect during each life stage, and the best ways to plan ahead. Financial planning can help you can gain a better understanding of where you are at financially, how to prepare for challenges that may be ahead, and how to plan for where you want to go.
Of course, every situation is unique, including the age and circumstances under which you begin implementing a financial strategy. And what suits you at age 25 is typically different from what meets your needs at age 55.
In a nutshell, the stages include:
- Building assets — At the beginning of your career, your financial focus is typically on accumulating your assets. Your ability to earn income may be your most valuable asset, so investing in your career is critical. It’s also important to establish an emergency fund, build your personal savings and pay off student loans.
- Investing for the future — When you grow more successful financially, you will increase your discretionary income. During this stage, you’ll start planning and saving for future goals, such as a child’s college education and/or a comfortable retirement. Make sure you have a well-balanced and tax-diversified portfolio to provide potential growth opportunities.
- Planning for retirement — As you near retirement, planning for it often becomes your financial priority. Begin by thinking about your retirement goals and dreams. Then, create a detailed plan that will help you get there. You’ll want to make sure you have the flexibility to take income in tax-efficient ways that will enable you to continue your lifestyle and be prepared for the unexpected in retirement.
- Generating retirement income — Once it’s time to enter retirement, begin implementing your retirement plan and enjoying the assets you’ve accumulated. After a few months, reevaluate your plan and make adjustments so you stay on track.
- Leaving a legacy — As you become older and more financially secure, leaving a legacy becomes paramount. Legacy is about the impact you’ll make on people, charities and causes that are important you. It’s also about making sure you have the right beneficiaries in place to protect your assets.
Regardless of the stage you’re in, it’s important to make sure that your legal and financial documents are properly organized to safeguard the most efficient and effective transfer of your assets — including property, personal belongings and investments — in the event of your death. Doing so can give you the added peace of mind that comes from knowing your family is as financially stable no matter what happens.
Remember, it’s never too late to start planning for the future.