Financial Planning By Age: Know Your Numbers

When a team is aiming to reach the championship, they can’t just wing it. Careful planning and goal setting go into every practice, drill and strategy, and coaches think about how the team’s players’ size, speed and experience combine to help them win. Then the coach helps each player maximize their performance using strategies designed specifically to fit their needs.

Planning for your personal financial future — setting financial milestones and tweaking financial goals by your age — isn’t all that different from planning to reach the championship. You need a strategy that fits your age and goals, as well as a set of financial milestones you can work toward. Financial planning by age requires knowing where you should be and where you want to go — and you’ll need to be able to make adjustments along the way. No matter where you are in the lineup, read on for our game-winning strategies.  

Financial Planning for Rookies (Young Adults)

Rookies are roughly in their twenties, and just starting out as a recent high school or college graduate. They may not have much in the way of savings or financial habits, but they’re ready to learn and grow. For the first time, they’re thinking about the milestones they need to reach, considering insurance and exploring financial planning options. They may have debt to pay down, and they’re focused on building for the future.

Keys to Your Game

• Build a budget. When you are starting out, take time to put together a budget that includes money for all essentials (like housing, food and debt payments, like on your car and student loans). Make room in your budget for important matters like insurance. Consider whether you’re ready to start making charitable donations and remember to put money into your budget for holiday travel and gifts. Finally, make a point to set aside money from each paycheck in a savings account. Need help drafting a personal budget? We share some essential tips here.
• Begin a long-term savings plan. Even though it seems like another lifetime, now is the time to begin investing for retirement, either through an employer-sponsored plan or on your own.  Dollars invested now go so much further than if you wait. If your employer offers a 401(k) plan, it’s wise to take advantage of it — and if you can, contribute enough to get an employer match to your funds. Need help choosing your allocations? Contact a Farm Bureau advisor for guidance and quick tips.

Stats to Know

• Compounding interest. When you start saving at a young age, you earn interest on that money. Over time, the interest you’ve accumulated earns more interest, compounding the earnings on your investment. Using this strategy can make your investments work harder for you, even if you put away less money than your older counterparts.

Starters (Young Families and Professionals)

Starters are moving to the stage in life, perhaps newly married, making strides in their careers or starting a family. If they started on their financial goals as a rookie, they may have a game plan in place. But now, it’s probably time to make some adjustments. 

Keys to Your Game

• College or retirement savings. If you’ve started a family, you may be wondering whether you should prioritize college or retirement savings. There’s no need to choose: with the right game plan, you can save for both your future and your children’s education — and you should! Talk to your Farm Bureau advisor for tips on the right strategies for your family.
• Life insurance. Now that you have laid a solid financial foundation, it may be time to consider building on it by adding life insurance to your portfolio. Between term life and whole life insurance, you have options. Your Farm Bureau agent can help you choose the right plan for you and the most important team you’ll ever have: your family. 

Stats to Know

• Risk tolerance. When you work with a Farm Bureau agent or advisor, they’ll ask a series of questions to help determine how comfortable you are taking risks with your money. Conservative investors prefer less risk of losing money than their more aggressive counterparts, who may prioritize the potential for growth over the possibility of loss. When you’re still a young adult, you may be able to take advantage of less conservative options to grow your portfolio faster, since it will be decades before you’re ready to touch that money. Your Farm Bureau advisor can help you develop a solid game plan.

 Varsity (In Your Prime)

By now, varsity players are seasoned at reaching financial goals and planning for the future. They’ve likely reached midlife and are ready to think about how to grow their wealth. They are in the prime of their lives and careers. Now it’s time to shine by working on their investment game plan.

Keys to Your Game

• Investment strategies. If you have been contributing to your retirement plans for a few years now, it may be time to add some goal-based investing. This could be a great time to direct your investment strategy toward a second home, a bucket-list vacation or another dream expense.
• Retirement planning. Whether you’ve been tucking away money for years or are just beginning to turn your attention toward retirement, consider adding an IRA, a Roth IRA or investments to your mix. Planning for the future will reap rewards with time.

Stats to Know

• Diversification. As the old saying goes, don’t put all of your eggs in one basket. Diversification spreads your investment risk into several different types of investment options so that you can protect yourself from market swings.

Ready to Coach (Retirement)

Coaches have been playing the game for a long time and are now ready to look to retirement. Those plans they’ve been putting in place can pay off big time.

Keys to Your Game

• Plan your legacy. When you are looking at the next steps for your business, farm or ranch, you want to ensure that you protect everything you have worked for. Retirement may be a few years away, but this is the time to think about farm succession planning or business succession planning. Make sure you understand retirement distributions and plan a budget that will work for you in this stage.
• Plan your estate. Now is the time to get things in order with your estate (including writing a will). Your estate should reflect your values and is a product of everything you have worked hard for. Consider what you want to give to your family, to charities or to other local organizations. Your Farm Bureau Advisor can connect you with the right resources and play an important part of your estate planning team.

Game-Winning Stats

• Stability. Even in retirement, insurance can play an important part in your financial plan. You protect everything you have worked for when you insure your home, auto and life. Annuities may also provide you with the retirement income and investment stability you’re looking for. Talk to your Farm Bureau agent about selecting the right options for your changing needs.

Win the Game of Life

No matter what your role on the team, or how much time you’ve been playing the game, your Farm Bureau agent or advisor can help you develop a winning strategy for your financial future.