Retirement: What About Your Other Financial Goals?

Let’s say that at the age of 25, you earned $35,000. If your salary increased at the average historical rate, you’d have earned nearly $2 million in total by the time you were 65.(1,2) That might sound like a lot – until you begin thinking about all the financial goals you’ll need to juggle in a lifetime, including buying a home and paying for your child’s education, while funding your own retirement.

If managed wisely, your money could potentially go a long way. It’s really all about putting a plan in place and sticking to it. These tips may help get you started.

financial goals retirement planning

Get a Jump on All Your Financial Goals

You’ve read in these pages before about the value of starting early on retirement savings, even if you can only invest a little each month. The same goes for college savings and other goals. Even a $100 a month investment for college could potentially leave you with about $16,470 in 10 years, assuming an average annual return of 6% – a good start that you can build on as your income grows.(1)

Set Aside a Slice of Pay Hikes

As your income rises over the course of your career, it’s easy to slip into a pattern of “living up” to your means; that is, spending that extra pay you didn’t have before on daily living expenses. Instead, consider setting a quota for yourself: Earmark a predetermined portion of every pay hike for your savings goals. You may want to apply the same rule to other windfalls, like an unexpected bonus or tax return.

Use the Right Tools for the Job

Just as your employer-sponsored retirement plan offers a tax-advantaged opportunity to set aside money for your later years, certain vehicles, such as 529 college savings plans, provide potentially attractive tax breaks for college savers. Minimizing the taxes you have to pay up front on investments and earnings gives you the chance to make the most of compounding over time.

Finally, whatever your particular financial goals may be, keep in mind that minimizing debt is a timeless, indispensable strategy for establishing personal financial balance.

Source/Disclaimer:
(1) Hypothetical example is for illustrative purposes only. Does not represent the return of any actual investment. (2) Assumes inflation-adjusted 1.5% annual wage hikes, as reported by the Bureau of Labor Statistics.

 


Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Diamond Credit Union and Diamond Financial Planning are not registered broker/dealers and are not affiliated with LPL Financial.

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This information has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.

The views, opinions, and ideas articulated in this blog are just that, and should not be construed as financial or legal advice. The writers of these blogs are educated on the topics they are writing about, but they are in no way licensed financial advisors or registered investment advisors. Diamond Credit Union is not responsible for any actions a person may take as a result of the information they read in one of our blogs.