Blog   Tagged ‘20s’

How saving money differs in your 40s, 50s and 60s

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We already told you how your financial goals and habits vary from decade to decade in your 20s and 30s. The same is true as you move into your 40s and up until retirement. Here are some pro tips on how to take full advantage of each unique decade.

generations

Things to DO in your 40s

Do meet with a financial planner to make sure you’re on the right track to retire when you want and with the right amount to continue living the lifestyle you want. Retirement may seem very far away, but you don’t want to let yourself be caught in your early 60s playing catch-up on your 401(k).

Do decide how saving for major purchases balances with your retirement saving. If you have children, are you going to pay for all or some of their college tuition? What about your children’s weddings? These are examples of things that can cause parents to be caught off guard and can put a pause on your important retirement saving. For more information on these decisions, take a look at our recent post on Kids’ college vs. retirement: where to save?

And one thing to AVOID in your 40s

Don’t miss out on the maximum match from your employer on your retirement plan. As we’ve recommended from your first job in your 20s, be sure to take full advantage of the match from your employer. Of course, going above that amount is also a great idea; just be sure you’re reaching that minimum amount to get your full match.

 

Things to DO in your 50s 

Do think of this decade as your time to save the most (less expenses with children out of the home and typically higher income than you earned earlier in your career). Consider paying off high-cost debt, such as your mortgage, if you haven’t already and then save aggressively.

Do add catch-up contributions to your retirement savings. Even if you’re tracking well toward your retirement goals, you’re allowed to save more now, so do it!

And one thing to AVOID in your 50s

Don’t wait until your 60s to purchase long-term care insurance. The average age to buy this type of insurance is 57. If you wait until a few years later, it will be much more expensive.


Things to DO in your 60s
 

Do prepare aggressively for retirement…even before your planned last day of work. It’s difficult to predict when health, layoffs or extra time needed to care for your aging parents will cause you to retire earlier. This is the case with more than 40 percent of workers.

Do think about downsizing. This isn’t something that needs to wait until you’re already retired. If you’re single or if it’s just you and your spouse in your home, consider where you want to live for the next few decades and if moving makes sense.

And one thing to AVOID in your 60s

Don’t keep the same insurance policies you had in your 30s. You might not need life insurance anymore. Check your long-term care insurance policy to see what benefits it includes.

Remember, whether you’re 21 or 68, it’s never too late to improve your financial plan.

 

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References: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspired by a Daily Finance article

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Ponce is a Financial Center Manager for UMB Bank. She is responsible for managing the Collinsville micro-market. She joined UMB in 1991 and has 23 years of experience in the financial services industry.



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How saving money differs in your 20s and 30s

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Have you noticed that your eating, sleeping and entertainment habits changed after high school and again after college? The same is true of your financial situation. With a different lifestyle comes different financial needs, which is why we’re bringing you a few dos and don’ts for these crucial decades.

generations

Things to DO in your 20s…

Do contribute to a 401(k), one of the 9 financial habits we told you about earlier. How much should you save? At least as much as it takes to receive what your employer is willing to match. Beyond that, 10 to 15 percent of your pre-tax income is a great start.

Do lay a sound financial foundation by developing good habits. Contrary to what you may hear, how MUCH you save for retirement when you’re young isn’t as important as saving consistently starting as soon as possible.

Do find inspiration in growth charts / calculators like these. It’s hard to focus on something that is decades in the future, such as retirement, so calculate how dramatically your goals can be reached if you start early. For example, if you start saving $300/month in your 20s, you could have nearly $100,000 by the time you’re 50 (and that’s only factoring a less than 1 percent annual interest rate).

And one thing to avoid in your 20s…

Don’t ONLY save for your retirement. Many people in their 20s make this mistake. Since you can’t touch this money until you’re 59½  (with limited exceptions), you’ll need to make sure you have separate savings for emergencies and non-retirement goals.

 

Things to DO in your 30s…

Do ask yourself if you should buy a home. The median age of first time home buyers is 31*. While that doesn’t mean that age will be the right time for you, it does indicate that your 30s are a great time to start considering home ownership during this decade. If you’re a star student and are reading this section as a 20-something, good job. Because the money you save in your 20s will come in handy when it’s time to buy a home in your 30s. The down payment, closing costs and inevitable home repairs that pop up as soon as the home becomes yours add up quickly.

Do get life insurance if you now have dependents. It’s a bummer to dwell on, so don’t over think it. You and your family will appreciate the financial peace of mind it gives.

And one thing to avoid in your 30s…

Don’t be afraid to talk to your children about money. If you are among the 30-somethings with children, you can start teaching them as young as pre-school or early elementary school the concept of spending and saving. Playing imaginary restaurant or store with them is a great learning tool.

Update: check out how to save in your 40s, 50s and 60s!

 

 

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Reference: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspiration for article from Daily Finance

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Johnson is a VP/Financial Center Manager for UMB Kansas City. He is responsible for driving sales and relationship activities within the Walnut Lobby Financial Center. He joined UMB in 2007 and has 11 years of experience in the financial services industry. Mr. Johnson earned an Associate’s Degree from MCC. He is currently pursuing a Bachelor’s of Science Degree majoring in Management and Finance from Park University.



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