NEWS & RESOURCES

Authored By: Jason Underwood, CFP, Financial Advisor 

Navigating Life’s Financial Stages: A Comprehensive Guide

Managing finances is a lifelong journey that evolves through different stages: early career, wealth building, retirement preparation, and estate planning. Each phase requires distinct strategies to optimize financial success and ensure long-term stability. 

Early Career & Wealth Building

Your 20s and 30s are the years where you are juggling the most: establishing your career, managing debt, maybe having children, and beginning to build wealth. This stage sets the foundation for financial independence. Key strategies include:

• Paying down high-interest debt first (e.g., credit cards and personal loans) to free up income for savings and investments.
• Establish a budget that prioritizes saving 15-20% of your income.
• Building an emergency fund covering 3-6 months of expenses to cushion against unexpected financial setbacks.
• Saving for major expenses such as a home, vehicle, or children’s education.
• Investing in retirement accounts (e.g., 401(k), IRAs) and high-yield savings to maximize long-term growth through compounding.
• Using insurance tools to protect your family’s well being and your wealth.
• Balancing short-term financial needs with long-term wealth accumulation through disciplined financial planning.

As you progress into middle age, financial priorities shift toward accelerating wealth accumulation and managing responsibilities such as:

• Increasing retirement contributions and diversifying investments.
• Reducing debt and optimizing expenses to ensure financial flexibility and security.
• Planning for aging parents’ financial and healthcare needs, including long-term care insurance and medical expenses.
• Reviewing and updating estate planning documents, such as wills and powers of attorney, to protect your financial legacy.

Preparing for Retirement

Within 5-10 years of retirement, financial priorities evolve again. While continuing to grow assets, it’s crucial to:

• Consider your investment portfolio’s risk while maintaining sufficient growth.
• Ensure savings, pensions, and insurance adequately cover future needs, including healthcare and long-term care costs.
• Shift focus toward protecting accumulated wealth through estate planning and risk management.
• Maximize Social Security benefits by strategically deciding when to claim them for optimal payout.
• Consider downsizing or relocating to reduce expenses and improve retirement cash flow.

Retirement & Wealth Distribution

Upon retirement, financial strategies center on maintaining lifestyle and managing wealth distribution efficiently. Retirement generally consists of two phases:

• Early Retirement (“Go-Go” Years): Active and independent lifestyle, with higher discretionary spending on travel, hobbies, and experiences.
• Later Retirement (“Slow-Go”/“No-Go” Years): Reduced activity, increased healthcare expenses, and potential assisted living or nursing care needs.

Effective retirement planning includes:

• Drawdown Strategies: Maximizing tax-efficient withdrawals to sustain lifetime income, considering required minimum distributions (RMDs) and tax implications.
• Estate Planning: Ensuring smooth asset transfer to heirs, reducing tax burdens, and securing financial legacies through trusts, gifting strategies, and charitable contributions.
• Legacy Planning: Establishing financial provisions for children, grandchildren, or philanthropic causes to leave a meaningful impact.
• Healthcare Planning: Evaluating Medicare options, supplemental insurance, and long-term care policies to address medical costs in later years.

Planning for the Future

Each financial stage presents opportunities and challenges. By proactively managing finances, you can build, protect, and distribute wealth efficiently during every stage of life. Regularly revisiting and adjusting your financial plan with your professional advisors ensures continued financial security and peace of mind. For more information, visit cnccpa.com or call (509) 663-1661.

Securities offered through Avantax Investment Services℠, Member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services℠. Insurance services offered through an Avantax affiliated insurance agency. Cordell, Neher & Company, PLLC, and Avantax are not affiliated.