During our lives, we move through the financial lifecycle. We begin by saving for a house, then focusing on children’s college education and later looking toward retirement. To help set financial priorities, consider the following life stages.
Early years (25-40). At this stage, it’s best to focus on growth-oriented products since many goals are several years away. To create a balance, life insurance offers safety and stability in addition to death protection.
• Increase savings through good financial habits.
• Consider taking risks with investments for the chance to outpace inflation.
• Have adequate life and long-term disability income insurance, ensuring policies cover needs.
• Beware of accumulating debt.
• Set up an estate plan after marriage and update when you have children. It’s important to have a will, a living will and a durable power of attorney.
Building years (40-50). Rising income is helping achieve goals during this stage. Expenses such as college education may reduce current spendable income. The need for growth is essential since retirement is nearing, yet impending goals may warrant a shift toward more conservative products.
• Size up retirement needs to project annual retirement income and expenses.
• Be more conservative and avoid making high-risk investments.
• Weigh your financial needs against those of children. Don’t let college costs interrupt retirement savings plan.
Refining years (50-60). Your peak earnings combined with reduced financial responsibility for children can make this stage financially rewarding. Accumulating assets for retirement is more important than ever.
• Consider a shift toward more conservative growth opportunities including inflation protection.
• Take a look at your estate plan. Your estate may have grown to the point you can benefit from advanced estate planning techniques, such as marital status and life insurance trusts.
• Determine desired retirement lifestyle and plan accordingly.
Rewarding years (60 and over). To maintain lifestyle during retirement, you’ll likely need extra income to supplement Social Security benefits and pension payments. The majority of savings and investment programs should focus on producing income and protecting investments against inflation.
It’s never too late to begin prioritizing. The first step to determine your financial needs is to conduct a needs analysis. Take action today to plan for a brighter tomorrow.
Jeff Meislahn is a Financial Representative of Principal National Life Insurance Company and Principal Life Insurance Company and a Registered Representative of Princor Financial Services Corporation. Securities offered through Princor Financial Services Corporation, 800/247-1737, member SIPC. Principal National (except in New York) and Principal Life are issuing insurance companies of the Principal Financial Group. Principal National, Principal Life and Princor® are members of the Principal Financial Group®, Des Moines, IA 50392. Jeff can be reached at 515/771-8175 or Meislahn.email@example.com.