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Submitted by Newell W. Anderson Jr., RBC Dain Rauscher

Building a financial plan tailored to your current situation is essential, but as many financial professionals will tell you, it’s equally important to factor in the future. As you grow older, you will likely have different concerns regarding your finances, which is why it is important to address each stage of life differently.

Your 20s: Time is of the Essence

When you’re in your 20s, the biggest asset you have is usually time, not money. Many people in their 20s have gained the education or skills they need to start a job, and are beginning to learn how to manage and invest their money. With the “time” factor in mind, it’s important to start investing that hard-earned money as soon as possible. If you start investing your money regularly at a young age, whether it’s through a 401(k) or IRA, you can build a large nest egg with relatively little effort.

Your 20s are also a great time to start identifying your short- and long-term goals. Think about what you want to achieve financially, and learn how you can budget to make it happen. If you have credit card debt, it’s important to consider that in your budget planning. Try to get that debt behind you. Even if you can’t pay off your credit card, try to pay more than the minimum amount due each month. If you pay only the minimum balance, chances are it’s barely enough to cover the card’s interest expenses.

Your 30s and 40s: Staying on Track

While your 20s are about building financial goals, your 30s and 40s should be about staying on track with those goals. If you have a 401(k), make sure you are investing as much as you can, or at least enough to get meet your employer’s matching contribution. If you’re planning to change jobs, don’t make the mistake of cashing out your plan. Instead, leave the money in your old employer’s plan or transfer it to your new employer. If you do not have those options, consider rolling your assets into an IRA. This will allow your savings to continue to grow, and it also provides the opportunity to consolidate your retirement savings in one place.

If you have children, start planning for their future. The earlier you start, the better. Consider custodial accounts, Section 529 Plans or Coverdell Education IRAs. Adequate life insurance should also be a priority if you have a family. But whether you’re a parent or not, it’s still a good idea to make sure your insurance coverage keeps up with your changing circumstances.

Your 50s and 60s: Focus on Retirement

In your 50s and 60s, you are likely at the highest income level of your career. As you near retirement, it’s important to figure out whether or not you’ll be able to maintain that standard of living after you retire. Take stock of where you are and determine if you should increase your retirement contributions. Work with your financial consultant to estimate what your expenses will be during retirement.

It’s also a good time to evaluate asset allocations to make sure they’re still in line with your goals and comfort level. You might have been able to afford more risk when you were younger, but as you get closer to retirement, you may want to consider more conservative investments.

Additionally, you should review your will to make sure you’ve chosen a power of attorney who can make financial decisions on your behalf. You should also have a living will that outlines your wishes if you become seriously ill or injured. If you haven’t established these documents at this stage in your life, consult a qualified estate attorney.

Wise preparation can mean a comfortable retirement, but don’t think that financial planning is over once you reach your golden years. It’s still important to manage your investments carefully, and make sure your insurance protection keeps up with your needs. You should also consider the legacy you would like to leave behind for your family or community. After all, you’ve worked hard to make your money last this long. Imagine how much further it can go.

This article is provided by Newell W. Anderson Jr., a financial consultant at RBC Dain Rauscher in Philadelphia, PA, and was prepared by or in cooperation with RBC Dain Rauscher. The information included in this article is not intended to be used as the primary basis for making investment decisions nor should it be construed as a recommendation to buy or sell any specific security. Consult your investment professional for additional information and guidance. RBC Dain Rauscher does not provide tax or legal advice. newell.anderson@rbcdain.com