When it comes to financial stability, people tend to focus on paying off debt and saving for retirement. In reality, many other financial goals beckon to individuals during their lifetime. Because of this, it’s important to look beyond retirement when setting targets, no matter how old you are.
Identify Future Objectives
While it is never too early to start planning for retirement, waiting until you reach 65 years or older to truly live is a mistake many people come to regret. A number of exciting possibilities are waiting for you throughout your life:
- Building an emergency fund
- Creating and growing passive income
- Starting a business
- Owning a home
- Becoming debt-free
- Raising a family
Some people start their careers making six figures or more; this is rare. By about 25 years old, making $35,000 or so is a reasonable expectation. If your salary increases follow the historical rate and you have no major employment gaps, you could earn almost $2 million by the time you’re ready for retirement.
Without a doubt, $2 million is a lot of money. If you take a second look at the list of potential financial goals, however, it begins to lose its comparative value. For instance, the current cost of a starter home is anywhere from $150,000 to $250,0001. Similarly, student loans are one of the biggest obstacles to a debt-free life. The average student loan debt is $29,800.
Create a Plan
If you’re starting to feel discouraged, the good news is that money isn’t a static asset. It has the potential to grow and do some of the work for you by creating passive income. In fact, people who begin to invest in their future early can better position themselves in the pursuit of their retirement goals. You can employ several different strategies to help your money go further:
The best time to start minimizing debt is before you take any on. This does not mean you should never buy anything on credit. It does imply wisdom in how you use debt. Also, be wise about payment terms, interest rates and the types of debt.
Whenever possible, pay down that debt as quickly as you can. However, never become so focused on paying off debt that you neglect your savings. Take yet another look at the list of potential financial goals. There is more to life then repaying big corporations.
Need help figuring out where to get started? Our financial professionals at LPL Financial can help. Contact Dave Littleton for more information today.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.
This material was prepared by LPL Financial, LLC