Summit Insurance Advisors
by Michael Harbron on Feb 25, 2019
Our finances are the sum of all the decisions we’ve made over the years. From where we live and work to how we spend our money, every decision adds up to the greater whole. If you avoid saving money in your 20s and 30s, you’ll start to feel squeezed for cash as you get older, making it harder to save for retirement. But saving money at a young age will help you get your finances in shape, so you can retire at an early age and avoid potential pitfalls. Use these money-saving tips to build wealth as you get older.
In Your 20s
When you’re young your habits become your character. This is a great age to ween yourself off your expensive habits like going out to eat several times a week, hitting the local Starbucks when you can easily make coffee at home, or overusing your credit card. Start thinking ahead and save your money where you can. You can create goals for yourself such as saving a certain amount every month or putting a certain percentage of your paycheck into your savings account.
Being in your 20s is also a great time to invest in a life insurance policy. The rates only go up the older you get, so this is your chance to lock in a great policy for a low monthly fee. You can easily find a policy for as little as $20 or $30 a month, but that won’t be true as you get closer to 40.
In Your 30s
Once you’re in your 30s, your financial outlook will begin to change. You’re probably starting to settle into your career, so you should have more income to work with. But instead of spending like there’s no tomorrow, consider putting more money into your retirement account. Depending on where you work, look for a retirement planning service. Some employers will even match how much you contribute to your 401K, so it’s better to start as early as possible.
Being in your 30s also means you’re responsible for more than just yourself. If you have kids or you’re thinking of starting a family, this is a great time to invest in a disability insurance policy. If you’re unable to perform the essential duties of your job, your family will suffer financially as a result. Make sure you do your research to make sure your family can survive if you get sick or are injured in an accident.
In Your 40s
Reaching your 40s usually means you have a better idea of your financial needs, including whether you want kids, where you’re going to live, and what kind of job you want to have, maybe for the rest of your life. With this information in tow, you can start making more informed financial decisions. Make sure your retirement account is on track to meet your needs as you get older. If it’s not, consider taking more money out of your paycheck for retirement.
As you look towards the future, considering upgrading to a permanent life insurance policy. This kind of policy provides life-long protection, so you can start looking at the big picture. You can also use this policy to accumulate cash value on a tax-deferred basis. You can then use that case value for anything you like, such as putting a down payment on a house, paying for your child’s education, or buying a new car. Again, it’s important to lock down these kinds of policies while you’re still young and healthy.
In Your 50s
Use your 50s to get your retirement account ready for the road ahead. Contribute the maximum amount to your account, especially as your kids go off to college and you pay off your mortgage. Talk to a financial advisor about your retirement plan, including what age you want to retire and what kind of lifestyle you want to have when you’re not working. Make adjustments to help you reach these goals.
You should also have a diverse investment portfolio, instead of putting all your eggs in one basket. Invest your money in different pools, so if the country experiences another recession, the housing market crashes, or your company files for bankruptcy, you can still retire on time.
Keep up with your permanent life insurance premiums to make sure your family is protected financially if and when you pass away. You might also want to consider long-term care insurance in case you or your partner gets hit with a chronic condition or a life-threatening illness. At this stage, your finances should be bullet-proof, so you can weather any pitfall that comes your way.
Keep these money-saving tips in mind as you get older. Start saving at a young age and start down a path towards financial success.
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