Twenty Years Out

The National Association of Personal Financial Advisors (www.napfa.org), the association of Fee-Only financial advisors, recently announced the results of a survey of its members as to their top retirement planning advice for pre-retirees.  The advice was structured for 5, 10 and 20 years out from retirement day.

To jumpstart Americans’ retirement planning, NAPFA asked its members to rank advice that represents the type of comprehensive planning that consumers should expect from a financial planner, including estate planning, investments, education funding, insurance and risk management, retirement planning and senior issues, among others. NAPFA-Registered Financial Advisors are CFP-certified, Fee-Only advisors that meet the highest education and ethics standards in the financial planning profession.

In my November blog I covered the 5 year out list.  Last month I covered the 10 year out list.  You can still find both of those articles on our website at www.MichaelBradyCo.com  Here are the recommendations for 20 years out from retirement:

1. Fully fund an emergency fund of three to six months of living expenses to avoid tapping into your 401(k) or home equity in the event of an emergency.

2. Boost your earning potential and benefits package now by contributing the maximum annual amount to your 401(k), or at least enough to receive a full employer match.

3. Contribute money to a ROTH IRA or other account to make sure you are saving in a tax optimized manner.

4. Coordinate your insurance needs with your employer’s benefits package to be sure you have adequate coverage should you become disabled (long-term disability) and evaluate the level of life insurance you need.

5. Ensure you have a diversified investment portfolio so that you are investing for growth and create tax diversification by allocating assets across taxable, tax-deferred and tax-free sources.  Consolidate multiple retirement accounts and/or brokerage accounts you may have.

6. Make sure you have basic estate planning documents in place (i.e. a will, durable power of attorney, possibly a revocable trust, a living will, healthcare proxy, etc.)

7. Set a benchmark “magic number” for an adequate retirement fund and establish a step-by-step plan for reaching your goal.

8. Do not sacrifice your retirement to put your children through college. It is possible to take out loans for college but not for retirement.

 Whether you are 5, 10, 20 or more years away from retirement, you should get started right away.  Let us know if we can help.