By Jon L. Ten Haagen, CFP ®
This is where you start out on your journey to retirement. Most experts say you start planning your financial future when you get your first job and first paycheck. For the best chance to retire when you want and with what you want, strongly consider getting serious now. You start with your first job at age 25 and plan to retire at age 65. This gives you 40 years and most of us get two checks each month. Forty years times two paychecks each month means you will be receiving 1040 checks during your working years. Now if you retire at age 65 and plan to live 30 years that means you have to generate your future paychecks out of your own saved assets. You have to generate a total of 30 years of paychecks to yourself twice a month, so that is 780 paychecks you have to generate and receive. How much do you want each paycheck to you to be? Money in equals money out plus investment growth. You do the math or call us to help you figure it out.
When your first check comes in, you are the first bill every payday. Most planners would like to see you put away 15 percent off the top. In the beginning when you are first starting out you most likely will say I can’t afford that much – yes you can and you should cut back in other areas to accomplish this.
You can start by putting funds into a personal Individual Retirement Account or a ROTH and also look into the retirement plan offered by your employer (401k, 403b, 457) plan if it is offered. If the employer offers a match on their plan you just plain have to invest up to the match – it is pure found money!
I am sure you have lots of reasons why not to invest (buying a car, or a home, or?) however, think about your long-term goals (the home, a spouse, children, education, etc.). Think about the security of those you care about and are responsible for. You will discover ways to find the money to invest for your future by creating a budget and balance sheet – they are like a financial GPS showing the best ways to find that additional money to put away.
Are you nearing retirement? Time to consider a lot of things: Planning for your (and your families) future, Making critical choices, Personal investment goals, Making the right moves, Investment risks to balance, Portfolio allocations, taxable vs. tax-deferred or Tax-free, pensions and qualified plans.
For years you have been investing for growth of your assets and now you have to start thinking of how you can convert some of the funds for income. Which funds do you change over? Which funds do you consider for the income portion and how do you address risk? There are a lot of questions to answer for yourself. Find a CFP and let them help you get started on the proper path.
Once again, we are standing by to assist you in any way we can. If we do not know the answer to your question(s), I can assure you we know where to go to get the answer you are looking for. We thank those of you who have reached out to us and look forward to hearing from you too. Have a wonderful summer and don’t forget the sun screen.