How Financial Planners in Phoenix Take a Decade-by-Decade Approach
Financial planning is more than managing investments and planning for retirement. It is taking stock of your entire life and developing sound strategies to protect your family and build wealth. Although no one financial planning solution fits everyone, financial planners in Phoenix can offer some generalized advice based on your age.
The 20s – During this decade, young adults are starting careers. A good portion of this age group is single with no children. They are financially responsible only for themselves.
In many situations, financial planners in Phoenix will advise building a substantial emergency fund – enough to cover at least six months of expenses. To arrive at the required amount, you will need to analyze your expenses. Calculating a budget based on what you earn and what you spend each month is a good starting point.
A challenge for many twenty-somethings is determining spending priorities. What do you really need and what can you live without? A financial advisor can help you see the trade-offs you will need to make for every purchase decision. If you buy an expensive car or go on a luxurious vacation every year, you may not be able to afford to buy a house for a while.
Financial planners will routinely recommend everyone, regardless of age, begin saving for retirement. Giving your money as much time as possible to grow will provide the security you need later in life. Plus, you want to take advantage of a company 401k plan, especially if the plan includes matching employer contributions.
Another financial strategy that does not get much attention is buying long-term disability insurance. Although you may be in peak condition during your twenties, you still need to consider what may happen down the road. The Council for Disability Awareness estimates one in four of today’s 20-year olds will become disabled before retirement. The organization also calculated the average time away from work because of a disability is 34.6 months.
If you cannot work because of injury or illness, disability insurance will provide up to 80% of your salary. The younger you are at the time you purchase a policy, the less expensive it will be.
Finally, make sure you protect yourself and any children if you have them. Financial planners in Phoenix can help you develop a power of attorney that gives someone the authority to manage your finances and healthcare decisions if you cannot.
You must also create a will that designates who will be a guardian for your children. If you do not have a will, your children could be left with no family to care for them. Or, the absence of clear, legal instructions can lead to bitter family feuds.
The 30s – When people hit their thirties, they often make more money and want to reward themselves for their hard work. They want to have what everyone else has, and more. Spending can get out of control without the help of a financial advisor. The right advisor will help you see the consequences of spending beyond your means, like not being able to meet your financial goals.
Many thirty-somethings are married, have bought a house and are raising a family. Their financial lives become much more complicated. They have to do all the things recommended for someone in their 20s, but also consider life insurance. The amount you purchase depends on how much of your income you would need to replace for your survivors.
The 40s – Paying for college is a big concern when you reach your 40s. Financial planners in Phoenix can help you decide how to fund your children’s college educations. They will analyze 529 savings plans and other strategies to come up with the best solution for your situation.
Like the previous decades, saving for retirement is of paramount importance. You should be meeting with your advisor regularly to see how well your plan is on track and make adjustments as necessary.
Another thing to consider at this point is securing a long-term care policy. Long-term care insurance provides coverage for a medical condition that requires supervision, whether in-home or nursing home care. You will pay less in your 40s and 50s for these policies. Once you reach your 60s, long-term care becomes more expensive, if you can even get approved for a policy.
The 50s – During this decade, you must kick your retirement planning into high gear if you have not saved enough earlier in life. You and your advisor will take a hard look at your retirement portfolio to determine if you have the right mix to meet your goals.
The common belief that you must get more conservative with your investments the closer you are to retirement may not work in your situation. It depends on your current situation, your goals, your risk tolerance and how well you can handle market volatility.
You also want to re-evaluate your estate plan and make any updates as needed. Making sure your wishes are carried out as you desire is important at any point in your life.
The 60s and Beyond – During your later years, you want to work with a financial planner to manage your plan. He or she will help you adjust your plan as needed and recommend new strategies if your situation warrants. If you’ve followed sound advice in your previous decades, everything should be in place and you will just need to monitor your plan.
Regardless of your age, you should work with a financial planner to manage your financial life. How much you prepared will depend on how comfortable you will live throughout the decades of your life.
At WealthTrust Arizona, the first step in the financial planning process is to create a written financial plan that outlines a step-by-step strategy that our financial advisors can leverage to achieve your financial goals. We require each client to have a financial plan that enables them to map out their future, set milestones to measure progress, and anticipate and prepare for life’s risks.
To learn more about working with financial planners in Phoenix, call for a free consultation at (480) 483-7300 or contact us online today for more information.