January is a good time to think about the milestones you and your family will experience in not only the coming year, but in the years that follow. Financially-driven life events, such as sending your kids to college, becoming empty nesters and even retirement take more than just 12 months of planning. So let’s make this the year that you get serious about investing in your entire family’s future
Let’s start with the most basic question: am I saving enough? While “enough” is certainly a subjective term we like to start the conversation talking about our client’s savings. A general rule of thumb is that by age 50 you should have saved six times your salary. So, generally speaking, if you’re 50 years old and you make $100K per year you should have saved at least $600K.
The good news is that being behind at age 50 is okay because there is time to invest in your future and adjust course. Being behind at age 60 is a more difficult conversation. For instance, when you are behind, market and employment hiccups cause more anxiety. When you are ahead, they are more easily recovered from with less drastic measures and more peace of mind.
Below are some tips to help you take the reins on your saving strategy this year.
Map out your savings strategy based on life events: Turn those savings goals from just numbers into life moments. By looking at upcoming events such as college tuition, retirement, vacations, etc., you can design your savings strategies around preparing for each life moment.
Select savings areas that will make the greatest long-term impact: Savings strategies are a marathon, not a sprint, so take a long-term view of investments that you can make now that will have the highest pay off in the future. For example, focusing on investing for retirement over saving for college.
Regardless of income levels, we are all investors: A common reason to delay getting serious about investing in your future is around the amount of money we earn. In today’s investment market, it doesn’t matter if you make $50K a year or a million dollars a year, you can design customized strategies that are right for your current and future life goals.
Don’t go in blind: Investing in your financial future is one of the biggest decisions you’ll ever make because it often impacts so many other life moments. Can you buy a new car or home? What about a boat or setting up a trust for your children? Once you’re ready to get serious about investing in your financial future, make sure you do your homework and meet with an advisor. All of that input will help shape your financial strategy.
Stay the course, but don’t be afraid to adjust as situations change: While remaining committed to your investing strategy is critical to its success, don’t be afraid to adjust your approach as your life evolves. Savings strategies before your kids go to college will likely change after they graduate. Your life is filled with monumental moments so make sure your investment approach can change with you.
You can get started by talking to a financial advisor about strategies for your unique situation. This will help you gain clarity about what your personal retirement picture might look like. Whatever road you decide on, just know there are resources out there to help guide you on the right path.
Make this the year you get serious about investing in your future.
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Rockland Trust gives you a variety of services that help you use and manage your accounts, whenever and wherever you want.