Regardless of what stage you’re at in your life, it’s wise to consider setting money aside for your future. If you are planning on saving more funds in the coming New Year, then you need to develop a structured plan. At the various stages of your life you’ll be faced with different financial responsibilities and those responsibilities will influence the decisions you need make.
Below are a few age-specific saving tips to consider as we move towards the coming new year.
Ages 51-69 (baby boomers)
If you were born between 1946 & 1964, then you are part of the baby boomer generation that makes up more than one-fourth of America’s population. Your financial situation may be better than that of your younger counterparts in some aspects. Your retirement account however, may not be exactly what you had hoped it would be at this point. In fact, only 60% of individuals within this age group confirm having any retirement funds at all. Most baby boomers also don’t have a pension and are they’re often faced with Medicare and Social Security challenges.
So you may find yourself feeling a little anxious at this critical time in your life. This is why you have to be a little more serious about saving, which may even involve having to adjust to a simpler lifestyle so you can pocket more money. Here’s a few ideas that can help you do just that.
· Start working again – many people in this age bracket consider going back to work and for good reason. There are always basic jobs available to you that can help add a little extra income, as well as help keep preoccupied now that you’ve presumable retired.
· Try to live on a minimum budget – you may even want to consider downsizing. At this stage in life especially its always easier to consider a smaller house with less up keep.
· Increase your post retirement investments – accelerating your retirement investments is always a plausible decision to make. Always consider consulting a brokerage firm for this type of decision.
· Ensure that all your investments are properly allocated – typically more than half of baby boomers are uncertain about the allocation of their investments. Again its important to do some research on your own and consult a brokerage firm.
· Consider long-term care insurance – this will help cover the costs of long term care beyond a predetermined period of time.
A Majority of baby boomer parents often take care of their children but doing so at the expense of their own financial security. According to a research done by Ameriprise Financial, 93% of these parents confirmed that they support their adult children financially, 71% helped them with college tuition & loans and 53% helped them purchase a car.
Ages 36-50 (Gen Xers)
A Majority of Gen Xers (born between 1965 &1979) are often occupied with things like raising families, advancing their careers or even caring for their elderly parents. Usually these are some of the most expensive years of one’s life, which can often bring about the challenge of managing your own cash flow. Raising kids can be quite expensive, as you probably know. Money management is very critical at this point in your life, every time you get paid set aside a fraction of that income before you spend it. Also give yourself some time to analyze your expenses and plan accordingly.
It’s also advisable to let someone else save for you – for instance, you can have your bank or employer take money off out of your pay and have it deposited into another account with ease. This can significantly help you achieve you savings goals or build your retirement account.
Remember, a big purchase that characterizes this stage of life is your home purchase. Its important to set yourself up for the future as much as possible when tacking on a mortgage.
Millennials tend to be doing much better than those of Gen X, especially when it comes to their daily finance management. However, when it comes to making financial decisions, they live in the moment and long term financial plans (e.g. retirement) can often be forgotten.
· Most people spend 30% of their monthly income on their rent. You can reduce this cost by living at home or even sharing an apartment.
· At this point in your life you might also find your self in debt with student loans. The best strategy is to go for an income based repayment plan.
· For your discretionary spending, allocate yourself a monthly or weekly allowance so that you do not spend more than you should.
The introduction of budgeting apps like Mint has also made setting goals as well as tracking your spending more manageable. It is also very important to monitor your credit score. This becomes significantly relevant if you are planning on buying a home in the near future. Your credit score will play a big role in determining the mortgage rate that you qualify for and therefore how much you can afford.
No matter what stage of life you’re in, take time to carefully save and manage your finances. Regardless of your current economic status you can always benefit from efficient planning and quality advice.