When a new client comes to our office for the first time, we typically start by asking “How can we help?” Starting a relationship with a financial planner is almost always precipitated by something happening in the client’s life—they want to retire soon, they just received an inheritance, they just learned they are seriously ill, they are dealing with the complexities of life with kids, parents, a house, jobs.
We work with people of all ages and in all stages of life. Most of the time there are multiple goals and part of our job is to help clients prioritize how they want to tackle them. Let’s take a moment to look at some typical goals by age to get you thinking about your own situation.
Planning in your 20s
Getting off to a good start in life is essential. Developing good money habits can create a lifetime of financial joy. Do you see anything in this list that you want to know more about?
- How much should you contribute to your company retirement plan?
- How much should you be saving outside of the company retirement plan?
- How to build up an emergency reserve savings so that you have a safety net for unexpected expenses?
- What’s the best way to start investing?
- What to consider when getting married? Having a family?
- Should you rent or buy a home?
- When should consider saving for your child’s education? Will grandparents want to help?
- How should you set up your filing system?
- How much debt is realistic to take without hurting your lifestyle or financial future?
- How to prioritize debt? Student loans?
- If you have kids, do you have a will? Powers of attorney?
- Have you thought about giving your time or money to an organization you admire?
Planning in your 30s
Now that you have some life experience, you can start to tackle some more complex issues. Do any of these sound familiar?
- When should you consider making a job change? Is there anything to consider in the timing of a change? Money left on the table?
- Is your child’s education funding on track? Are there tax savings you should be taking advantage of?
- How to prioritize education savings, debt repayment, home remodeling, new car, vacation spending, saving for retirement?
- Are you maximizing your company benefits?
- Do you have enough insurance outside of work? Are you protecting your family and your assets?
- How do you make sure the risk you are taking with your investments is appropriate?
- What do you do if the markets drop significantly?
- Are there tax deductions you should be taking?
- Should you start your own business?
Planning in your 40s
You are mid-way through your working career. How are you doing based on your original goals? Do you need to take a fresh look at any of these?
- Is your portfolio well diversified, consolidated, aligned with your values and risk tolerance, tax sensitive?
- Have you considered the unrealized capital gains and losses in your taxable accounts? Should you be doing anything to reduce current or future taxes?
- Do you need to review your estate plan? Have any of the people you named died? Do you need a trust now?
- Is it too early to run a retirement projection? When is it feasible to consider making a major change?
- If your kids are going to college, will you be eligible for financial aid? How can you help keep your kids from taking on too much debt for college?
- Are your parents getting to the point where they might need additional help? Are you in a position to help them?
- If you are self-employed, should you consider taking on a partner or selling the business?
- If you get company stock benefits, do you understand how to maximize those benefits?
- Have you thought about a more structured giving plan? Do you understand the tax implications?
- Are you happy in your job? Should you learn new skills? Should you change firms? Careers?
- Have you had a divorce or death in the family?
- Do any family members have special needs?
- How much should you help your kids financially without “ruining” them?
- Can you afford a second home?
Planning in your 50s
Lots of times we see clients lose patience with some of the things they don’t like about their jobs in their 50s. We have lots of discussions about how life could look different if they make a change. And how to not do something financially foolish. We see more transitions starting in the 50s. Do any of these apply to you?
- Are you within five or ten years of retiring? Have you done a retirement projection to know what your next steps should be?
- Will you get a pension? If so, do you know what options you’ll have to take out the money? Are there tax implications?
- Are you thinking of retiring before age 59 ½? Are there special rules that would help you from a tax perspective?
- Do you have company stock in a retirement plan? Are there special rules that allow you to have a different tax treatment when you retire?
- If you are thinking about leaving your job, but you know you still need to work, do you know how much you’d need to make a year in a part-time position?
- Have you thought about “retiring in place”—where you continue to work, but stop making retirement plan contributions to cut expenses?
- Do you have a contingency plan in case you lose your job? Can’t work for health reasons?
- What happens if your parents need more assistance? Have you talked to them about living options? Continuing Care Retirement Communities? Staying in their home with additional care? Moving in with you?
- Have you diversified your portfolio sufficiently if you own company stock?
- If you own your own business, do you have a succession plan?
- Should you buy long-term care insurance?
Planning in your 60s
People are living longer and staying fit and healthy. The 60s can be a time of realizing new successes in your work life or a time for exploring more time with your family in retirement. It will almost always bring changes.
- How should your investment strategy change as you phase into retirement?
- How will you take distributions from your portfolio? Have you considered the tax implications?
- Have you weighed your Social Security claiming strategy? When should you start taking benefits and how will that affect your spouse’s benefits?
- Should you pay off your mortgage? Consider a reverse mortgage?
- How will health care costs change in retirement? How much should you allocate for this expense?
- Do you still need life insurance? Should the amount change? Up or down?
- Should you roll over your company retirement plan at retirement or leave it with the company?
- If you get a pension, should you take a lump sum to roll over or take an annuity?
- Have you reviewed your estate plan recently?
- Should you think about downsizing your home?
- Are there borrowing issues you should think about before your retire?
- Are you worried about running out of money in retirement? What have you done to plan for that? How would you adjust the plan if the economy got much worse?
- How will your tax situation change after retirement? Have you ever paid quarterly estimated tax before?
Planning in your 70s, 80s and Beyond
70 is the new 60. Lots of people are choosing to work well into their 70s and even 80s. It all depends on your health and your mental acuity. And where you find joy!
- Can you afford to give more to your kids or grandkids? Can you afford to take the grandkids on a special trip?
- Do you know how to calculate your “required minimum distributions” from your retirement accounts? Should you give some of that to charity to avoid the taxable income?
- If you need additional help, have you thought about where you would consider going and how you would pay for that? Do you have insurance that would help cover those costs?
- It’s not uncommon to start experiencing some signs of dementia. Have you noticed that you are having more trouble recalling things? Have you thought about what would happen in your family if you experience cognitive impairment?
- Have you had your most valuable personal property appraised recently?
- Have you considered establishing a donor advised fund for charitable giving?
- Do you know what geriatric care managers do? Do you think you might need their help?
- Have you written down where your heirs can find your important documents and any online passwords?
Now planning doesn’t always fall according to where I’ve put it by decade. I’ve had clients retire in their 40s and work part-time to spend more time with family. I’ve had clients encounter serious illness in their 40s and have to drastically modify their expectations about work. I’ve had clients who thought they would retire in their 60s find that they loved consulting and happily worked until they were 80. I’ve had clients live past age 100.
When we first meet with a new client, we develop goals and prioritize them. But what constitutes financial joy may change over a lifetime and we need to reassess along the way. Life throws curve balls at almost everyone. They can involve family issues, economic hiccups, health setbacks or a host of other issues.
Take a look at these lists and write down everything you think might bring you more joy. Now prioritize and identify your top three goals. That’s where you need to start. That’s where you’ll set your intention.
We all start with good intentions, but it’s easy to lose sight of your goals. Make a point of revisiting your progress quarterly. Remember why you are making these goals your priority. How will they bring you joy? Then try again until you succeed.
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.