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How To Plan for the 5 Financial Stages of Your Life and Career

By: Kenyon Sutton, Financial Wellness Manager

Posted on 3/21/2022 1:36:46 PM

Excited young couple seated together on couch in apartment budgeting for their future

Our lives are all in a constant state of change, and so are our finances. Financial goals that we have at age 25 don’t typically match our goals at age 55 because we are in a different financial stage of life. Most people go through five financial stages that reflect where they are in their life and career. Regularly reevaluating your personal and work goals is an excellent way to keep your financial planning on track. Let’s look at the financial planning milestones for different ages.

Early Career: Building Your Foundation

This is an exciting time for most of us. You’ve entered the workforce, are building your career, and are seeking ways to grow. Some of us marry, and some of us begin a family. Your major financial tasks at this stage include:

  • Learning to budget and developing the discipline to stick to it.
  • Starting to build credit while you avoid falling into a debt trap.
  • Starting an emergency fund – or building it up if you’ve already started
  • Begin investing – even if it’s just through your 401k with your employer

Just remember that early planning is key, so take these steps now to set yourself up for financial success.

Mid-Career: Your Prime Earning Years

At this point in your career, it’s time to shift from just managing your money to supporting a family and building long-term wealth. By now, you should have built up some savings. You have also gained some wisdom on making sound financial choices. Now’s the time to consider:

  • Buying a house or upgrading to a condo.
  • Contributing the maximum allowable amount to your retirement accounts (not just your employer sponsored 401k).
  • Purchasing a life insurance policy.
  • Preparing your will and other estate documents like advance healthcare directives and financial powers of attorney.
  • Saving for the kids' college funds.
  • Increasing how much you put into savings.

Pre-Retirement: Nearing Your Career Completion

These years can be some of the most enjoyable and fulfilling in your life. You might want to spend more time with your children and grandchildren. Financially helping them can also be very rewarding. As you begin to leave the 9-to-5 lifestyle behind, keep yourself on track to retire at age 65 by:

  • Making any adjustments necessary to align your retirement plan with your current goals.
  • Paying off as many expenses as possible, including your mortgage.
  • Continuing to max out your retirement contributions (including any eligible catch-up contributions).
  • Exploring how to limit your tax burden on any post-retirement income.
  • Consider a Long Term Care insurance policy or include potential health care needs when creating an emergency fund.

Elderly woman seated at table with friends, painting a lighthouse landscape

Early Retirement: Work Less & Enjoy More

You’ve finally made it to retirement! Now it’s time to enjoy the rewards earned from decades of growing your wealth. The most significant challenge at this stage is not overspending and hurting your nest egg in the process. If you hope to support an active lifestyle that includes travel, volunteer work, or even continued part-time work:

  • Monitor your spending and savings withdrawals.
  • Track your portfolio to ensure it’s growing and protected.
  • Continue managing your tax situation.
  • Revise your will to reflect your current lifestyle and financial holdings.

Late Retirement: Your Golden Years

The later years of retirement are, for many people, some of the best. You spend your time doing more of what you love, and you get to put your retirement accounts to hard work. These three steps help ensure you get the most out of your golden years:

  1. Discuss changing needs with a financial planner.
  2. Manage savings to cover unexpected medical bills or future assisted living.

Maximize tax savings on any investments you sell. As the saying goes, the only constant in life is change. Whether you’re just starting with your financial journey, or you’re looking for ways to strengthen your current financial strategy, Community First Credit Union can help. To learn how, contact us online today to discuss your financial stages of life or call us at 904.354.8537.

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