When it comes to life’s milestones, there are many. Life is a wonderful thing, made special by the various milestones we reach throughout the journey. From starting a career to getting married, changing jobs to job advancement, from having children to having great-grandchildren, and of course retirement.
When it comes to financial stability, people tend to focus on paying off debt and saving for retirement. In reality, many other financial goals beckon to individuals during their lifetime. Because of this, it’s important to look beyond retirement when setting targets, no matter how old you are.
Waiting until you turn 65 to truly live is a mistake many people come to regret. As Private Wealth Management specialists, we have encountered individuals who believe that their lives will only truly “begin” after they retire at 65. While planning for retirement is essential, we believe it’s a mistake to postpone living fully until a distant future date. The truth is that life is filled with exciting possibilities at every stage. Whether it’s pursuing a new career, starting a business, traveling the world, or simply exploring personal passions, the opportunities for growth, fulfillment, and joy are abundant throughout one’s life. We’ve seen clients embark on remarkable journeys, such as launching successful entrepreneurial ventures in their 40s, discovering new passions and hobbies in their 50s, and even taking sabbaticals to explore the world long before retirement. Waiting until retirement to live your best life can lead to missed experiences and regrets. It’s our mission to help our clients make the most of every moment and create financial plans that enable them to embrace life’s adventures, both big and small, at every age.
While some people start their careers making six figures or more, this is rare. The median salary for those 20-24 years old is $706 per week—or $36,712 per year, according to the Bureau of Labor Statistics. Those in the 25-34 age range have a median salary of $52,156 per year. If your salary increases follow the historical rate and you have no major employment gaps, you should earn close to $2 million by the time you’re ready for retirement. Without a doubt, $2 million is a lot of money. If you take a second look at the list of potential financial goals, however, it begins to lose its comparative value. For instance, the median current cost of a starter home in 2022 was $325,000—a 48% increase over the cost of the same house in 2019. 2 Similarly, student loans are one of the biggest obstacles to a debt-free life. The average student loan debt is $37,787, and nearly 43 million borrowers have federal student loan debt.
Create a Plan.
If you’re starting to feel discouraged, the good news is that money isn’t a static asset. It has the potential to grow and do some of the work for you by creating passive income. In fact, people who begin to invest in their future early can better position themselves in the pursuit of their retirement goals. You can employ several different strategies to help your money go further:
Designate a portion of raises. Instead of increasing living expenses to match any pay increases, try to retain the original budget as much as possible and invest the extra. Keep the same starter home you bought. Drive your current car for as long as possible.
The amounts we earn vary significantly among individuals throughout our earning years. To mitigate this, start small. Save $100 per month if you can and $10 per month if you can’t. It all adds up, especially when properly invested. In 10 years, $100 per month at a 6% annual return could potentially grow into $15,996. (This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.)
When you purchase a vehicle or buy a home, consider the maintenance cost and tax breaks. For instance, is it better to invest in solar panels than a new sunroom for your home? Likewise, consider the potential tax or economic benefits of a small electric vehicle or hybrid over a new mid-size SUV.
Make use of programs and incentives. There are many financial products and accounts available that could help you invest your money in a tax-efficient manner. These include HSA accounts, 401(k)s, Individual Retirement Accounts (IRAs) and 529 college savings plans. Taxes can have a big impact on passive income. It is important to manage their impact over a lifetime.
The bottom line.
In the grand tapestry of life, our milestones paint vivid strokes of color and meaning. While retirement savings is undoubtedly a significant chapter in one’s financial story, let us not forget the myriad of other financial goals that enrich our journey. Whether it’s buying your first home, funding your child’s education, embarking on a dream vacation, being able to leave a legacy, or simply achieving peace of mind through financial security, these milestones deserve their own spotlight. At every age and stage, financial aspirations bloom, and they all contribute to the mosaic of a well-lived life. So, as you set your sights on financial success, remember that life’s milestones are more than mere destinations – they are the very essence of your unique financial journey. Embrace each one, cherish every moment, and let your financial plan pave the way to your dreams.
Need help to figure out where to get started? Contact InVestra Financial for more information today.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial, LLC for the use of InVestra. Member FINRA/SIPC.
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