When you think about retirement, what are your dreams? Maybe it means enough savings to take month-long vacations that involve tropical beaches, or maybe it means having sufficient savings to pay the bills and take the occasional trip to visit your grandkids. Whatever your post-career dreams are, retirement planning is the way to bring those dreams to fruition. If retirement is still decades away, saving for your future may not feel as pressing as taking care of your current expenses. One concern we commonly hear about here at Anchor Wealth Management is how to find that balance between current financial needs and future ones. This is where financial planning steps in to help.
If talk of 401k savings and investment planning makes your head swim, there is no need to worry. Retirement planning, at its core, is a roadmap designed to take your finances as they are now and get them where you want them to be by the time retirement rolls around. Because it takes both the present and the future into account, retirement planning can be started at any point. However, the earlier you get started, the better! Yes, even if you are still fresh out of high school, now is a great time to start planning for retirement. No matter where you are, the sooner you get started, the quicker you can get your finances in order and actually reach where you want to be.
How It Works
There are a few key things that set retirement planning apart from simply stocking up money in your savings account. The primary difference is that your financial advisor will take the time to discuss what your financial goals are and what matters to you, both now and for the future. With that knowledge, they will then help you develop a comprehensive plan that will help you make decisions intended to get you where you want to be, financially speaking. Another big difference between strictly saving versus following a financial plan is that financial planning takes into account the vagaries of life. Your financial advisor will look at things like the quantity and types of debt you carry, income and expenses, whether you have children, and so on. From there, they will be able to advise you on investments, paying down debt, recommendations for life insurance, and so much more.
Making A Savvy Start
Financial planning is intended to be a comprehensive plan that takes your life and your dreams into account. This means that retirement plans will look different from one person to the next. It also means that there is no one point at which everyone should universally start planning for retirement. The short and easy explanation is that starting sooner is more beneficial and makes it easier to attain your retirement goals. However, life brings with it a huge range of changes and different needs. Retirement planning specifically (and financial planning in general) helps you handle those changes and make decisions accordingly.
If you are unsure where to begin with retirement planning, the best bet is to talk to a financial advisor. They will provide you with a framework of suggestions based on your specific circumstances. However, there are a few things that are pretty universally beneficial. First, paying off your debt is going to be beneficial in both the short-term and in the long run. This means making a concerted effort to pay down any credit card balances, loans, and so on.
After you have paid down your debt, excluding your home, the focus can shift more heavily to 401k and IRA accounts as well as other investment options. At that point in which you’ve accomplished this, even paying your mortgage more quickly can be beneficial, but do check the terms of your loan to see if there are any penalties for paying off your loan faster.
At Anchor Wealth Management, we are fiduciary financial planners and Dave Ramsey SmartVestor Pros with years of experience providing financial guidance in the Northern Illinois area with offices in both Lanark and Rockford as well as licensure in 18 other states. No matter where you are in the retirement planning process, we can help you create a comprehensive financial plan based around your needs and dreams, teach you about the process, and guide you along your journey. Allow us to be your anchor in turbulent financial waters; contact our team today to schedule a meeting.
Disclosure: investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and 529 Product Program Description, which can be obtained from a financial professional and should be read carefully before investing. Depending on your state of residence, there may be an in-state plan that offers tax and other benefits which may include financial aid, scholarship funds, and protection from creditors. Before investing in any state's 529 plan, investors should consult a tax advisor. If withdrawals from 529 plans are used for purposes other than qualified education, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax.