How Your Investment Strategy May Change And Evolve As You Age
By Crystal Prachyl
When it comes to reviewing financial goals in different decades throughout your life, it is important to consider how the priority of each goal can vary based on age, income and expenses. Retirement is usually the largest goal when starting a financial plan; however, other goals may have a higher or lower priority depending on how many years until the particular goal will be reached. Starting with a financial plan to list out each goal, cost and length of time helps when budgeting to achieve success. Typically, someone in their 20s is focusing on settling into a career, the first set of financial goals being creating an emergency fund, paying off debt and comparing buying to renting. Starting to prepare for retirement by saving in an employer-provided retirement plan such as a 401(k) is also an important part of the foundation. Once you reach your 30s and have settled into a career, you may be focusing on a family in your first home. Retirement may seem far enough away to keep it a lower priority, instead you may be focused on saving for a child’s college, down payment for a second home, finishing up paying off school loans or using additional funds for home renovations or traveling. Even though you are juggling many different goals to save for, consider maxing out any type of retirement possible; over time the investments in tax-deferred accounts can appreciate which can help you reach longer term goals like retirement. As you approach your 40s and 50s,savings should increase as household income increases. Expenses for children in your household may also increase during this time in your life. Pay yourself first by continuing to save and invest in accounts you don’t plan to access for a 3-5 year (or longer) period of time. Although there are many online tools to help with projections and asset allocation, finding a trusted financial advisor to help with planning and investments can be key when reaching a successful financial goal.