The Big Five Financial Stages of Life
There is more to life than money, but money plays a very big part of life. Plan carefully by understanding these five critical financial stages of life to help you enjoy a future successful retirement.
Money isn’t the key to happiness, but it requires attention. Doing the right things with money at these five crucial financial stages of life can make a big difference in the quality of life through the decades. These are general observations. Everyone has unique circumstances, so consult a professional financial advisor and tax expert to create the best plan for you.
Depending on your age you may have already passed through one or more of these stages, but you probably know someone younger who can benefit from all of these suggestions.
First Real Job
When you land a full-time job with benefits, you should count your blessings, but also watch your money. Make a budget and stick to it. Live within your means, so you can make your student loan payments and pay other bills on time. If your employer offers a 401(k) or 403(b) plan, participate. It may seem odd to start planning for retirement at this early stage, but starting early takes advantage of the time to build savings for a comfortable retirement when the time comes.
If you don’t have an employer-sponsored retirement program available, try to set aside 5-10% of your pay in a tax-advantaged plan like an IRA. Try not to add to debt at this stage. Instead, build a good credit score by paying down debt you have.
Partnering Up and Having Kids
Expenses go up as your family grows. If you could not make the maximum contributions to your retirement plans earlier, do it now. In addition, save six months to a year of living expenses in an emergency fund. Consider long term disability and life insurance.
You should have a will in place and consider putting together a trust. A will is important, especially if you have children. If both parents have passed a plan needs to be in place to benefit your children. Your documented preferences will ease the stress on the extended family. Perhaps the most significant reason for having a trust in place is to guarantee your children will receive their inheritance without any difficulties. Trusts will also shield assets from creditors. Plus, trusts will reduce estate taxes and eliminate the probate time.
Pre-Retirement
At age 50, evaluate your savings and retirement plans. Make catch-up contributions if you are behind. Adjust plans to account for major expenses like college tuition and increased health care costs. Maintain a portion of your portfolio in funds that can appreciate to take advantage of the time you have for the growth of your assets.
This is also a great time to plan for the costs and burdens of aging. You have already noticed changes in your health and body at this point. You will see even more changes as you get older. These changes will lead to long-term health care. This care is expensive and can place tremendous burdens on your family.
For many people, affordable Long-Term Care Insurance will be part of the plan. You can research more about long-term care planning by clicking here.
Early Retirement
Woo-hoo! You made it! Your biggest task is to resist the temptation to overspend. Be conservative in what you draw from your retirement savings. Focus on your major goals rather than frittering money away on little things.
Many early retirees are still full of energy and take “third act” jobs to keep their hand in the working world, or even start new businesses of their own. But be careful not to invest in overambitious or unrealistic plans.
Talk to your financial advisor about your asset allocation again. Consider dialing back more of a “protect and earn” strategy. You may also need to amend your will and trusts if you have grandchildren to consider.
Late Retirement: Death and Taxes
Prepare for the inevitable. Health care costs will rise as you age. Talk to your financial advisor about tax strategies and maintaining an income. If you have not already done so, consider downsizing. Depending on your health and independence level, you may need to consider a senior community or an assisted living facility.
You may need to adjust your budget and adopting a tax strategy that keeps you in a lower income bracket. You may have to start taking Required Minimum Distributions (RMDs). RMDs are the minimum amount you must start withdrawing from qualified retirement accounts once you reach age 72. The RMDs will create a tax event.
The five financial stages of life demand planning. When you do plan, no matter what stage of life you happen to be in, you can enjoy the best things about life with less worry.
Ready to Naviagte?
Navigating life's big five financial stages can be a rewarding journey, including starting your own business. For example, if you're based in the Golden State and have entrepreneurial aspirations, learning how to start an LLC in California can constitute a vital part of your financial journey. This guide makes understanding the process easier, providing step-by-step instructions to ensure your business is legally sound.
About the Author
Mallory Knee is a freelance writer for multiple online publications where she can showcase her affinity for all things beauty and fashion. She particularly enjoys writing for communities of passionate women who come together for a shared interest and empower one another in the process. In her free time, you can find Mallory trying a fun new dinner recipe, practicing calligraphy, or hanging out with her family.
Mallory Knee
Contributor since September 25th, 2020
Editor's Note
As you navigate the path toward retirement, it's vital to look beyond the horizon of leisure and travel and consider the realities of aging and long-term care. Chronic illnesses, mobility issues, accidents, and conditions like dementia can shift the landscape of your golden years, making daily tasks and self-care challenging. The cost of long-term care can be staggering, quickly eroding savings and investments you've dedicated a lifetime to accumulate.
You should integrate long-term care into your retirement plan, acknowledging that the need for assistance or supervision with everyday activities is not just a possibility but a common aspect of aging. Medicare may cover only a fraction of these expenses and only under specific conditions, leaving a significant financial gap. Planning ahead with options like Long-Term Care Insurance will safeguard your nest egg and provide the necessary support without overburdening your family or compromising your quality of life.
Consider this: the need for long-term care is often not a brief period at life's end but can span years. This care can be provided at home, in an assisted living facility, or in a nursing home, each with varying costs and considerations.
· LTC NEWS Cost of Care Calculator - Find Care Cost Where You Live
By addressing these needs in your retirement planning, you ensure that choices about your care remain in your hands, not dictated by circumstances. You have the power to access your choice of quality care in the setting you desire so you can shape your future comfort and dignity, but it requires action now—because when it comes to long-term care, hoping for the best without planning for it is a risky strategy.
Every insurance company has its specific underwriting standards that can vary widely - What Is Underwriting In Long-Term Care Insurance?
Your reasonably good health gives you the ability to plan effectively. Most people get coverage in their 40s or 50s, although if you have fairly good health, you can find options in your 60s and beyond.
Advantages of an LTC Insurance Specialist's Expertise
Navigating the landscape of Long-Term Care Insurance can be daunting, with many options and complex underwriting processes. This is where the expertise of a qualified Long-Term Care Insurance specialist becomes invaluable. They bring a nuanced understanding of how different insurance companies evaluate risk and set premiums, allowing them to tailor coverage that aligns with your unique needs—taking into account your age, health, and financial objectives.
A specialist will shop at all the top-rated insurance companies and provide you with accurate LTC Insurance quotes.
Furthermore, a Long-Term Care Insurance specialist offers benefits that a general insurance agent or financial advisor might not be equipped to provide. Here are key reasons why a specialist is the preferred choice for your Long-Term Care Insurance needs:
- Access to Multiple Top Insurers: They usually represent the top insurance companies, not just a select few.
- Comprehensive Policy Options: Experts in all types of policies—traditional plans, including partnership-certified policies; hybrid policies that offer death benefits; and short-term cash indemnity policies with broader underwriting rules.
- Certified Expertise: Many hold a Certified in Long-Term Care (CLTC) designation, signifying specialized training and knowledge in long-term care planning.
- In-Depth Underwriting Knowledge: Proficient in the full spectrum of underwriting rules, which can vary widely among insurers.
- Regulatory Insight: They're well-versed in both state and federal regulations, which can impact policy details and consumer protection.
- Claims Experience: Their experience at the claims level means they understand how policies are actually implemented, providing practical insights that go beyond the policy sale.
Choosing a specialist who embodies this wealth of knowledge and experience will guide you toward making an informed decision, ensuring you receive the coverage when it matters most.
· Find a Qualified, Independent LTC Insurance Specialist
Discover Long-Term Care Planning Tools at LTC NEWS Resource's Hub
At LTC NEWS, a wealth of tools and resources awaits to guide you through the intricacies of long-term care planning. You can access an array of helpful features, including the innovative Cost of Long-Term Care Calculator, which helps you estimate future long-term care expenses across different settings and regions.
Here are a few of the resources available on LTC NEWS:
- Top Insurers for Long-Term Care Insurance
- Long-Term Care Insurance Cost: Factors, Considerations and Price Ranges
- Who Needs Long-Term Care Insurance?
- What Are The Components Of A Long-Term Care Insurance Policy?
- How To Apply For Long-Term Care Insurance
Finding Quality Care for Mom or Dad
LTC NEWS offers help for you and your family in many ways. The LTC NEWS Caregiver Directory is an excellent resource where you can find the most comprehensive directory of all types of long-term care services no matter where your loved one lives - Long-Term Care Services Directory | Find Care Near You.
If your loved one has an LTC Insurance policy, that will open the door to many quality care options, as one of the first questions most home health agencies and long-term care facilities will ask you is if the care recipient has an LTC policy.
Be sure to use the benefits from a loved one's LTC policy; trying to save them for later is not a good approach since access to quality care improves a person's quality of life immediately.
LTC NEWS has combined efforts with Amada Senior Care, a leading in-home health care agency with locations throughout the country, to help you process a claim from any LTC Insurance policy.
There is no cost or obligation for this service - Filing a Long-Term Care Insurance Claim.
If they don't have an LTC policy, Amada can still help develop a plan of care and provide you with many affordable in-home care options.
Learn more now - Find Quality In-Home Care.
These four LTC NEWS guides will assist you in trying to find appropriate long-term health care services for a loved one:
- Finding Quality In-Home Care
- Adult Day Care Centers (ADCCs)
- Assisted Living and Memory Care Facilities
- Finding a Quality Nursing Home
Benefits for Your Website and Business - LTC NEWS
LTC NEWS offers an assortment of marketing and advertising options to help you reach your target audience. Our sponsored content articles are a highly effective way to drive traffic to your website, increase brand awareness, and build relationships with potential customers.
Benefits of Sponsored Content on LTC NEWS
- Drives website traffic: Sponsored content articles are placed on LTC NEWS's homepage and other high-traffic website areas, ensuring that a large audience sees your message.
- Increases brand awareness: Sponsored content articles are written in a way that educates and engages readers, helping to position your brand as a thought leader in your industry.
- Connects with target audience: LTC NEWS's audience is made up of people who are interested in long-term care, making it a great way to reach potential customers who are already considering your products or services.
- Improves SEO: Sponsored content articles are written in a way that is optimized for search engines, helping to improve your website's ranking in search results.
In summary, sponsored content on LTC NEWS is a powerful marketing tool that can help you boost website traffic, SEO, brand recognition, and audience engagement. Traditional advertising is also available to keep you in front of potential customers.
Learn more about how LTC NEWS can help market your business, drive traffic, and improve SEO - Advertise With Us | LTC News.
LTC NEWS: Share Your News with Us
LTC NEWS is a leading website for news and information about aging, caregiving, health, lifestyle, long-term care, and retirement planning. We are always looking for new stories to share with our readers.
If your group, organization, business, or political committee has news to share, we encourage you to submit a press release to us.
You can submit your press release - newsroom@ltcnews.com
