How Wealth Management Strategies Change With Age

If you’re like most people, you started dreaming of retirement (or at least a time you no longer have to work) at your first job. It’s natural to want to spend your time enjoying family and friends rather than at work.

While most of us are likely to have to work right up to or through retirement age, there are things you can do along the way to have the kind of experience you want once you stop working. Each decade of your wealth-building journey presents strategies to help you retire with a nest egg to live your desired lifestyle.

This article will walk you through how wealth-management strategies can change over time.

Get a Head Start in Your 20s

If you’re fresh out of college, you might think it’s too early to start saving money for retirement. In reality, it’s the best time. The earlier you start saving, the longer you have to take advantage of compounding, which can grow your funds significantly if left alone over the years.

Speaking of that first job, if your company has a 401(k), sign up as soon as possible and try to put in enough to receive any matching contribution your company offers. It’s essentially free money, and you should take advantage of it.

If your company doesn’t have a 401(k), open an individual retirement account (IRA), giving you access to more investment options. Look at stocks beyond your retirement accounts if you have money to invest. You may feel more comfortable take higher risks at a young age because you’ll have more opportunity to make up for losses over time.

Keep the Pressure on in Your 30s

You’ll likely feel more financial pressure in your 30s due to your job, spouse, children, and mortgage. But don’t let your retirement goals get buried under a mountain of other responsibilities.

Make sure you have a solid budget and are spending no more than 25% of your net income on housing, if possible. Avoid using credit to purchase the things you need, and build an emergency fund (three to six months of your take-home pay). Doing so will help keep an emergency from disrupting your retirement plan.

This also is a good time to consider diversifying your investment portfolio.

If you plan on sending any kids to college, consider a tax-advantaged 529 plan, which allows your contributions to grow tax-free if used for qualified education expenses.

Invest in Yourself in Your 40s

Your 40s are your prime earning years. If you haven’t started saving in a 401(k) or IRA, start now and put away as much as possible. The annual contribution limits are $23,000 and $7,000, respectively.

Also, open a Roth IRA, which will allow you to withdraw money tax-free once you retire but also has no requirement for distribution and can continue to grow through your retirement.

At this age, knowing where your money is and how it’s invested is important. If you don’t have a financial advisor, it’s time to find an experienced wealth-management team like Shared Vision Wealth Group.

Reduce Your Risks in Your 50s

Once you’ve reached your 50s, you shift your focus to protecting the wealth you’ve built throughout your earlier working decades. Turn your investing strategy from your 20s around and consider more conservative investments, such as bonds, with a focus on saving.

If you didn’t contribute your 401(k) before, max out your contributions now. The IRS allows people age 50 and older an additional $7,500 (for a total of $30,500) in annual contributions, and you can put away an additional $1,000 (for a total of $8,000) in an IRA.

Get Help From a Financial Advisor

To learn more about how wealth-management strategies can change over time, contact Shared Vision Wealth Group today. Our knowledgeable professionals can offer valuable guidance and insight for every season of your life.