At Kennedy Wealth Management, we provide a variety of financial advising services to folks in Southern California, but our biggest focus by far is retirement income planning. We believe that everybody deserves the right to spend the last few decades of their life in carefree happiness, and we’re here to help them get there. But this leads to a common misconception about our business — that our services are primarily targeted towards elderly people. But the opposite couldn’t be more true; we want to help young adults, because they’re the ones who can benefit the most from planning their finances here and now.
By the point you reach old age, most of your financial decisions have already caught up with you, for better or for worse. But in your 20s and 30s, you’re laying the foundations of what could eventually be a generous retirement income. The choices you make during these years have great import, and wise financial investments can greatly multiply in your favor over the decades.
For all of our readers in their 20s, here are some prudent financial choices you can make RIGHT NOW to ensure a bright future for you and your family:
Learn About Your 401(k) Options
You can’t have a conversation about retirement income planning without bringing up the 401(k). The 401(k), after all, is a special fund that’s designed for the specific purpose of building retirement income. Though there are many ways to plan for retirement, why ignore the most obvious and easy one?
In a nutshell, a 401(k) account allows you to invest money into a savings account without paying taxes on the gains until retirement age. Though there are multiple types of 401(k) accounts, that’s the most popular one. 401(k) accounts are generally offered through employers, and they usually will match your contributions up to a certain amount. The general wisdom is to contribute enough each month to get the full match, and then some if you can spare the money.
Of course, there’s a lot more to say about 401(k) accounts then just that — we could write an entire book about them! If you want to make the wisest financial decisions regarding your 401(k) account, be sure to give Kennedy Wealth Management a call.
Save, Save, Save
Retirement aside, there is nothing more important that you can do with your finances than save. This is especially true at a young age, because the earlier you set aside the money, the more dividends it will pay down the line.
The more money you can manage to save, the better — this should go without saying. However, it’s good to set a realistic baseline that you can achieve with every paycheck. Setting a hard 10% saving goal is a great place to start, but if you can manage to put in more, it’s all the better.
Saving will come in handy for retirement, but it’s also a boon for every other area in your life. One huge aspect of retirement, for example, is having valuable assets, such as land or property. It’s exceedingly difficult to buy a home if you’re not saving up, but if you start at a young age, you can start building up equity as soon as possible, which will give you tenfold more options when you’re nearing retirement age. There are many ways to save, so don’t hesitate to contact us today if you want professional advice on saving and building wealth.
Build an Emergency Fund
While this concept is similar to saving, it’s prudent to set up a separate account entirely for emergencies, and put money into that every month. You can treat this similarly to your standard savings account — put 10% into it, and let it sit.
The difference? This account is specially designated for emergencies. One of the biggest mistakes young people make is to have a singular savings account, which they end up dipping into whenever they have a crisis on their hands. If an emergency happens, they could end up depleting their account in one fell swoop. Sure, it’s more favorable than going into debt, but there’s nothing that stings so much as having to spend all the money you’ve been saving up for years. Goodbye, house down payment!
Your emergency fund will come in very handy when you have unexpected shake-ups such as car repair, medical bills, family emergencies, and so on. Don’t get caught unprepared!
Make Wise Investments
We realize how banal it sounds to just say “make wise investments, it’s that easy!” In reality, investing can be a complex minefield, and it’s far easier said than done to find safe and reliable investments. But that being said, you have to start somewhere. Did you know that many millionaires live off their investments alone? It’s a difficult game to navigate, but if you find the right investments to put your money into, you can set yourself up for life.
This, more than any of the other items on this list so far, is something you should definitely see a financial advisor for. There is a wide spectrum of investments, and for the average layman, a little bit of professional help can go a long way. On one hand, you don’t want to be tossing all your money into high-risk, high-reward investments because those could fold at any moment and make your money disappear. On the other hand, some investments are so easy and so safe that they don’t generate a huge return — you could probably be spending your money on something more productive.
We can’t make blanket statements about good investments, because it’s highly dependent on one’s income level, circumstances, and life goals. At Kennedy Wealth Management, we offer investment management services, and we encourage you to give us a call if you want to set yourself up on the right track. It’s wise to invest aggressively, but if you don’t do it right, you’re setting yourself up to fail.
Pay Off Your Debts
This is another thing that’s much easier said than done, but it needs to be mentioned regardless. If you’re young and in your 20s, debt is pretty much a given. You should consider yourself extremely lucky if you haven’t accrued any at this point, but if you have, don’t worry, it doesn’t have to be as stressful as you might think.
Debt isn’t the world-destroying burden that some people make it out to be, but it can also have much more devastating impacts on your life if you don’t handle it the right way. You want to eliminate as much debt as possible, as early as possible — but on the other hand, you don’t want to throw all of your money at debt and leave yourself with nothing else. Balance is required in all things.
We recommend contacting us if you want professional wisdom on how to handle your debts in relation to retirement planning. The ideal solution is different for every person. It’s universally true that everybody should pay off their high-interest debts as soon as humanly possible. As for your other debts, the solutions are variable. For some people, it’s best to tackle each debt one by one and just take care of them so you can focus all your money on saving. For other people, the debts might be so huge that you don’t want to delay your savings. Contact us today, and we’ll provide professional consultation!
Retirement Income Planning Services in Calabasas and Surrounding Areas
Are you looking to build the brightest possible future for yourself? The best time to start was yesterday, but the second-best time is now! We would love to help anyone in their young adult years to get a head start on wealth management, but we gladly provide our services to people of all ages. After all, it’s never too late to start managing your money. We are the best retirement income planners this side of California — give us a call today to get started.