If you’re between the ages of 35 and 55, it’s time to get stubborn. Not like a toddler or teenager trying to assert their independence, but more in the sense of being committed and unyielding as you work toward your financial goals.
Why now? Well, this 20-year age range will most likely be your high-income-earning period. According to the U.S. Bureau of Labor’s latest numbers, these two decades are when income is highest for both men and women. You need to be stubborn about your saving and investing strategy during this time, as it’s the moment when you will have the most income at your fingertips. And you want that money hard at work for your future.
Be Stubborn About Building a Strong Foundation to Help Meet Your Goals
Your goals should be the driving force for your financial decisions. Once those goals are set, give yourself permission to work toward them with all the stubbornness you can muster—particularly when your income is at its highest.
It’s not about reaching a certain dollar amount or having the highest possible net worth; it’s about investing in the future you want for yourself and your family. You can begin to establish a strong financial foundation by carefully managing cash flow, contributions, insurance, taxes, debt, and asset allocations during these important years.
With this strong foundation, also keep estate planning top of mind. It’s not a one-time event. You should consider reviewing it every three to five years or when you experience financial, family, or legislative changes. As your beneficiaries age and your wealth grows, you may need to adjust your estate plan so it accurately reflects your intentions.
A good base can help to protect you and your loved ones. As you build it, you can account for potential challenges. For example, if you die as the primary income earner, could your spouse afford to send the kids to college or be able to retire comfortably? Or if you require extra care as you age, do you have the right insurance to meet those needs?
Once you have a sturdy foundation, you can more confidently build a plan for retirement and a legacy for your loved ones that aligns with your goals.
Be Stubborn about Finding Additional Opportunities
Financial planning doesn’t need to rely entirely on income. Income tax planning strategies can play an important role. This approach helps you think longer-term about your taxes—exploring ways to reduce taxes over many years. With proper planning, tax management can bolster your ability to grow your wealth.
And if you are philanthropically inclined, opportunities may exist to help you support your favorite nonprofit organizations in a more tax-effective manner. Charitable giving strategies such as donor-advised funds and charitable trusts could be options to consider.
Be Stubborn About Planning and Protecting Your Future Income
As your income increases, so does the potential for your spending. It may be tempting to upgrade your lifestyle—a larger home, higher-end purchases, or luxury experiences. But that additional income could be put to use building the potential for greater security for your family and financial freedom in retirement.
With your goals in mind, consider all the ways those funds could be benefiting your future:
- Bolstering your emergency fund
- Increasing contributions to your and your spouse’s retirement savings
- Reducing debt
- Building up college savings for your children
- Investing strategically
If your lifestyle increases with income, and you’re planning to continue spending the same amount through retirement, you need to save enough money during those higher-income years to maintain that spending rate. The sooner you begin, the more time your investments have to grow—potentially allowing you to meet your goal at a lower rate of saving than if you wait.
Find a Partner to Help You Get Stubborn
Throughout your high-income-earning years, your financial advisor can be a support for you as you work toward your goals—an accountability partner helping you on your journey toward financial freedom.
Beth Schanou is a non-registered affiliate of Cetera Advisor Networks, LLC.
This article is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.
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