Kevin Ward – Advisor
Life is full of unknowns—simultaneously a source of tremendous potential joy and anxiety. But with thoughtful planning, you can mitigate some of the unknowns—or at least better position yourself to handle surprises when they arise. In this series, we explore some planning you can undertake, depending on your phase of life. People admittedly do things in their own order—everyone’s on their own journey—so rather than group considerations into age brackets, we’ve grouped it relative to where you are with respect to your (or your significant other’s) career. If you happen to tackle life in a different order, first, good for you. And second, these pieces should nevertheless offer some ideas for you to explore more either on your own or alongside a seasoned financial advisor, so you can still position yourself well to handle whatever the future throws your direction. Among the considerations we consistently explore are those related to benefits management, insurance, your balance sheet (managing liabilities, or debt, and assets), and saving for major life events or purchases.
As your career winds down, you should ideally have your retirement planning and preparation well in hand. If you don’t, the worst course of action would be panicking—rather, seek the advice of an experienced financial advisor who can help objectively evaluate your situation and develop a plan to ensure you’re able to maximize your post-career time and options.
Depending on your age and that of your family, you may have children in college during these years—which could mean your expenses have temporarily increased (possibly meaningfully). If you could save adequately when you were younger, these added expenses may not significantly impact your monthly cash flow. In which case, your disposable income could increase during this period as you have fewer mouths to feed, and you begin to shift from a full-time family to, eventually, empty nesters. As was the case earlier in life, when you first got a job and began accruing disposable income, it can be tempting to spend on splurge items—a sports car, a vacation home, etc.
But it would be wise not to take your eye off the ball just yet—deferring some of those purchases to retirement in favor of maximizing your savings could pay dividends down the road. This is particularly true of your retirement accounts, especially if your employer matches or partially matches your contributions. Capitalizing on the last few years’ maximized contributions could help ensure you reach your goals for retirement and don’t feel financially squeezed down the road.
As in other phases of life and career, periodic reviews of your situation—your benefits, insurance, debt, estate, trust, powers of attorney, etc.—are always well-advised, and this phase is no different. Furthermore, as you get older, make sure to let the relevant parties—heirs, successor trustees, executors, etc.—know where your important documents are kept. You should develop a plan in conjunction with the appropriate professionals (such as your estate planning attorney, financial advisor, etc.) on how the proper parties will be able to access any important documents. This will ensure your plans and preferences are easily accessible when they’re needed. It might also be worth considering what your retired life will look like—especially with an eye to ensuring your plans are sensible and achievable. Though it may be late in the game to make significant adjustments, it’s better to know where potential blind spots are than not.
Relatedly, it may be advantageous to begin researching some of the choices and decisions retirement will bring your way—e.g., insurance and health care considerations, income sources and paycheck replacement options, where you would like to live, how you would like to spend your time, and others. We explore these topics in more depth in several companion pieces. Given all your planning throughout your adult life to get to your current stage, this is the last moment to abandon your plans or fail to look forward to the next stage.
Planning for all of life’s variables is impossible—particularly in an age where many are fortunate to have more resources (and, therefore, more options) than prior generations. But that hardly means that lack of planning is a viable strategy for achieving long-term success. Rather, as we have sought to emphasize throughout this series, planning and forethought are critical to building a life as free of financial stress or worry as possible. Further, with relatively little effort, it’s often possible to build a sufficient cushion that you’re not only able to care for your immediate family along its unknowable journey, but you’re also able to help friends and family should the need arise. You also may be able to support causes meaningful to you and your family. Financial flexibility is one of life’s greatest freedoms—the sooner you start planning, the likelier you are to experience it to the fullest.
© 2022 Moneta Group Investment Advisors, LLC. All rights reserved. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information and opinions contained herein are subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise.
