by Kevin Janiec CFP®, MBA
Between today and your eventual retirement, a lot is bound to happen.
Marriage, children, vacations, new homes and cars, renovations, relocations, lifestyle changes, career moves, emergencies, education payments, bull markets, bear markets, world events, compound growth, and defining moments.
Many of life’s most significant decisions will occur along the path between where you stand today and where you will be standing when you eventually retire. So the question is – how proactively are you planning for all the things you might experience on this path?
The reason I ask is because we hear a lot about short-term thinking like “living for today.” On the contrary, we also read a lot about long-term thinking like saving for retirement and maxing out your 401(k). But it’s all that stuff “in between” that too often gets forgotten about. And so we continue to spend what we spend, and deduct what we deduct in a 401(k), year after year throughout most of our careers. But aren’t we limiting the potential in the peak of our adult lives by doing this?
Saving all of your money in retirement accounts that limit your access before you are at least 59 ½ years old can limit what’s possible in all of the decades prior to your 60s, 70s, and 80s. There is likely an opportunity to strike a better balance with all of your goals, priorities, and timelines. You just need to know what these priorities are and how to go get ’em.
For example, we often see opportunities to develop a monthly investment plan in a taxable brokerage account for that business investment, shore house, or travel fund 10 years from now.
We see opportunities for more parents to use college cost calculators, so they can begin investing the necessary monthly savings into a 529 College Savings Plan.
We see opportunities to map out timelines and wish lists of future home renovations, so homeowners can plan their savings, projects, and financing strategies accordingly.
More than anything, we see the critical opportunity for couples and individuals to routinely discuss, define, and write down their short, intermediate, and long-term goals. This regular exercise enables the investors to approach those goals with the necessary balance, alignment, focus, motivation, and yes…money.
Don’t get me wrong. 401(k)s and IRAs are fantastic accounts to save towards and take advantage of. They offer great tax benefits and allow for the power of compounding to play out over the long-term nature of the retirement savings. It’s undoubtedly important to focus on saving enough for retirement, but it’s just one of many priorities in your adult life…and it’s the one that seems to already get substantial attention.
So are any priorities coming to mind that you’re not properly saving and investing for?
The first step is determining what they are, when they will occur, and how much money will be required to fund them.
The second step is selecting the appropriate accounts and investment strategy to use for each goal.
The third step is establishing an ongoing savings plan to make consistent progress on these goals over time.
Regarding the goals you’re thinking about right now, which ones seem likely and which ones are a stretch? With New Wealth Project, we’re here to help you navigate the road between today and your eventual retirement. Because it’ll be one heck of a journey…especially if you plan ahead.
Investment Advice offered through FC Advisory LLC, a registered investment adviser doing business as “New Wealth Project” and as “Financial Coach”. This content is provided for informational purposes only. Views and opinions expressed are those of the authors and do not necessarily reflect those of FC Advisory, LLC. Information provided is not and should not be interpreted as investment, tax, legal, or other professional advice or recommendation by FC Advisory, LLC or the members of our firm. Always consult the appropriate professional regarding your specific situation before implementing any options presented or inferred. FC Advisory LLC, All rights reserved.