Financial Planning: Key Considerations for Different Ages

Published by Gabe Fransen on

Gabe Fransen | May 16, 2024

At Strategic Financial Group we feel that retirement planning is a crucial part of your financial journey, and the earlier you start, it is likely you’ll be better prepared for your golden years. In this article we will discuss various strategies that can be utilized at different stages of your life that may help you have a more comfortable retirement.

20’s and 30’s:

  • Start early: Time is one of your greatest asset when it comes to retirement savings. The earlier you start saving, the more time your investments have to grow through compounding.
  • Take advantage of employer-sponsored retirement plans: If your employer offers a 401(k) or similar plan, contribute as much as you can, especially if your employer offers a matching contribution.
  • Diversify your investments: As you are still young, you may be able to afford to take on more risk in your investments. Consider allocating a comfortable portion of your portfolio to positions which have historically provided higher returns over the long term.

In your 40’s:

  • Increase your savings rate: As your income likely increases during this time, consider increasing your retirement savings contributions. We like our clients to find a balance in having a lifestyle that they enjoy while preparing for a retirement that they envision enjoying.
  • Frequently review your investment allocation: Rebalance your portfolio if needed to maintain an appropriate level of risk as you approach retirement.
  • Pay off high-interest debt: Focus on paying off any high-interest debt, such as credit card balances, to free up more money for retirement savings.

In your 50’s:

  • Catch-up contributions: Once you reach age 50, you are eligible to make catch-up contributions to your retirement accounts. Take advantage of this opportunity to save more for retirement.
  • Re-evaluate your retirement goals: Reassess your retirement goals and determine if you are on track to meet them. If not, consider adjusting your savings rate or delaying retirement.
  • Plan for healthcare expenses: Start thinking about your healthcare needs in retirement and consider contributing to a Health Savings Account (HSA) if you have a high-deductible health plan.

In your 60’s and Beyond:

  • Strategize Social Security Benefit Plans: You may consider delaying Social Security benefits until age 70 to maximize your monthly benefit amount. You may also consider ways to optimize your Social Security benefits for your specific situation and financial plan.
  • Reallocate your investments: As you approach retirement, fine tune your financial and retirement plan. If needed consider shifting a portion of your portfolio to more conservative investments, that aim to protect your savings from market volatility.
  • Create a retirement income plan: Develop a plan for generating income in retirement, including Social Security, pensions, and withdrawals from your retirement accounts.

Maximizing your retirement savings requires a long-term commitment and a well-thought-out strategy. By following the tips outlined above and regularly reassessing your financial situation, we believe that you will find confidence and comfort regarding your financial situation in your retirement years. It’s never too early or too late to start planning for your future. Working with a financial advisor professional could help you navigate the intricacies of the complex financial industry.