ManagingYour Money:

A financial “to do list”for investors of all ages

John S Renza III, J.D., MBA

John has more than 16 years ofexperience in the financial servicesindustry and focuses on serving theneeds of successful individuals andfamilies.

AUTHORS

Peri is the Managing Director ofKLR Wealth Management andprovides strategic planning andconsulting to a variety of clients.

Peri Ann Aptaker, Esq., CPA/PFS, CFP

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4 Introduction

Part 1: Managing Money in your 20s

Part 2: Managing Money in your 30s

Part 3: Managing Money in your 40s

Part 4: Managing Money in your 50s

Part 5: Managing Money in your 60s

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INTRODUCTION

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We often get asked the question: “Howmuch money should I have saved forretirement?” Simply put—there is no “onesize fits all” response. Everyone hasbeen dealt a different path in life. Welike to address these questions bygetting people to start financial “To-Do”lists for every stage of life.

Let’s start with your 20s.

If after reading this eBook, you wouldlike more information or havequestions regarding your financialplanning, please visit klrwealth.comor contact us at 401-274-2001.

Part 1. Managing Money in your 20s

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Many are experiencing their first jobs out of college and,with that, financial responsibilities that are beginning tomount. The best piece of financial advice to givesomeone just starting out is to simply get started. Whatdoes this mean?

Time is on your side, millennials! Get started on your savings today.

In your 20s you should….

• Be consistent with your money habits• Begin contributions to Retirement Savings• Work retirement plan – defer enough to at least

meet company match, • Plan for long-term goals- Pay off student loans?

Buy a house?• Build up a cushion/emergency account with at

least 3 to 6 months of salary

Managing Money in your 20s

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Retirement plan option not available at your place of work? Look at setting up

Individual Retirement Accounts (IRA) with

contribution being made directly from your paycheck

– this will keep you disciplined and on track.

Get started on a savings plan.

For most, your first job out of college mightpresent you with the option to start to savefor retirement under a 401(k) plan, forexample. Take this opportunity! Defer atleast enough money to meet a companymatch - which is essentially “free money”.

The common contribution froman employer is generally 3% to 6% of anemployee's pay. For employees to receivethis contribution, they must contribute aspecified percentage into a 401(k) plan.The employer will then match thatcontribution to the retirement plan beingoffered.

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Prioritize short-term and long-term goals.

Maybe part of your short- term plan is to make asignificant dent in your student loan debt.Maybe your goal a little further out is to buy ahouse. Whatever the goal is, the key is to set upa savings plan and stick to it.

Set up an emergency account.

The emergency account should be funded withat least 3-6 months of salary. How do you getthere? Be consistent. Set up a plan where youare setting aside a certain amount each payperiod – you will be surprised how fast this addsup!

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From a retirement savings perspective and goals

setting mindset, Millennials are in a great position – they have time on their side. The key is finding consistency with

spending habits!

Managing Money in your 20s

Part 2. Managing Money in you 30s

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You may not recognize it immediately but investing in your future now will pay

off down the road.

Entering your 30s? Odds are your financial situation isone that may be in a start/stop mode. You may bejuggling quite a few different expenses such asmortgages, student loans, and possibly even child care.

Some things to remember in your 30s…

• Invest extra cash

• Keep contributing money to your retirement accounts

• Work with an attorney to draft a will and health care power of attorney

• Assess your current insurance coverage

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Everyone’s circumstances are

different, however setting aside about 8-12 months’

worth of expenses is a good general rule of

thumb.

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Managing Money in your 30s

Build your emergency savings account.

Your 30s might introduce greater financialresponsibilities, likely a mortgage or children. Thepoint here is that having an even greater emergencyfund set aside is even more important.

Once your emergency savings is funded, avoid letting extra cash sit in your checking account and invest it!

This will give your money a better chance to grow and allow you a better chance to reach your goals. Maybe a goal is to save for a down payment on a house, maybe another is to save for a child’s tuition –having a clear plan will help you in making better investment decisions.

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Continue to save for retirement.

A simple plan is to try to put away as much as 15%into your retirement accounts (this would includeany match you are getting from your employer).

Write a will.

Many people do not think about this until after theyhave children but it is important to outline your wishesin the event of death. An extension of this, is to alsowrite up a health-care proxy that explains yourmedical wishes and who is in control to make medicaldecisions for you should you become incapacitated.Revisit these documents every few years!

Review your insurance coverage. Make sure the right coverage is in place

to cover those who rely on your financial support in

the event something happens to you.

Managing Money in your 30s

Part 3. Managing Money in your 40s

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37% of employees age 35-44 and 34% of employees

45-54 have less than $1,000 saved for

retirement, according to the Employee Benefits

Research Institute.

In your 40s…

Put away 8% to 15% of salary Save extra cash when possible Maximize earnings: raise? Open taxable account – another

component of retirement savings Talk to parents about estate plans

Your 40s are a critical decade as you continue on yourpath toward retirement. This important stretch of yourlife is one where you will likely approach peak incomeearnings. In approaching peak income, this is a timewhere you can make strong strides toward your long-term goals if you have not already started to do so.

Managing Money in your 40s

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Maximize earnings

Maximization of earnings needs to be a priority inyour 40s. Part of this maximization includesnegotiating your salary and maybe even asking fora raise.

Some questions to ask yourself:

Is your current salary on track to support your current lifestyle?

Are you living within your means while at the same time setting enough aside for retirement?

Can you supplement your income?

For a 40 year old who has not started to save for retirement, setting aside $650 per month

could add up to $1 million in retirement savings by the time he/she reaches 67

years old.

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Talk to parents about estate plans

Another area that is often overlooked is talkingwith your parents about their estate plans. The keyhere is to ensure that they have the properdocuments in place to ensure that their wishes arecarried out accordingly.

Important components to discuss?

Wills Trusts Medical Directives Power of Attorney Beneficiary designations (are these up to

date?)

Also, do you know where to find

information as it relates to their

finances, estate plans or who to call?

Managing Money in your 40s

Part 4. Managing Money in your 50s

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How to stay on track:

Play catch up: start contributing more to retirementaccounts ($6,000 additional for 401(k) plans….$1,000for IRAs)

Continue to build your non-retirement assets Assess your current portfolio allocation: do you need

to rebalance? Look to consolidate numerous retirement accounts

held at different institutions Figure what expenses you will need to allocate to in

retirement: health care is an important component(do you have long-term care insurance?)

When you enter your 50s, retirement is no longer such adistant concept, which is why financial discipline is extremelyimportant. Feeling a bit overwhelmed?

The general rule of thumb is to have

saved approximately five times your annual salary by the time

you are in your 50s.

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• For Traditional and Roth IRAs, a person who is 50 yearsold and older can add an additional $1,000 to the$5,500 that they are already allowed to contribute.

• For those in 401k, 403(b) and 457(b) plans themaximum annual contribution is $18,500. For those 50year old and older they can contribute an additional$6,000 to these plans.

• SIMPLE 401(k) plans have a maximum contribution of$12,500 with a $3,000 catch-up contribution limit.

“Catching Up” on retirement savings

Individual retirement accounts and employer-sponsoredretirement accounts have a provision which allows investorsto put even more money into their retirement accountswhen they reach age 50.

In addition to your retirement savings

pay attention to your non-retirement

investments. How are these assets

balanced?

Managing Money in your 50s

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Healthcare costs

Part of your spending habits in retirement that you maybe overlooking are health care costs - with people livinglonger than previous generations it is important to takenote of this critical expense and how it would impactyour retirement savings. Health care costs candramatically deplete savings.

The costs for insurance products will only go up as youage because you become a greater risk. While you maynot have any health issues now you cannot lose sight ofthe future – look into long-term care insurance as anoption to help with these medical care costs.

You might consider purchasing long term care insurance which

could help pay for assisted living costs or at-home health care.

Managing Money in your 50s

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The traditional retirement age used to

fall somewhere between 62 and 65. The current state of

retirement has individuals working

well beyond their 60s and into what was

traditionally defined as the retirement years.

Part 5. Managing Money in your 60s

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To retire, or to not retire, that is the question.

When it comes to retirement, the 60s are the new 50s.Why are we seeing this trend? Simply put, people areliving longer and in a lot of cases, individuals find that theyhaven’t saved enough for retirement, so they have nochoice but to continue working.

How can you ensure that your 60s are financiallyresponsible?

Consider looking for ways to earn extra income. Continue to build up savings Delay filing for Social Security benefits Assess your health care costs Revisit your asset allocation – how is your portfolio

allocated? Organize your personal and financial matters

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Delaying Social Security

If you are in your 60s and you are behind on retirementsavings, all hope is not lost. Are you still in a position towork longer? If so, take advantage of setting aside more toyour retirement accounts. Take advantage of catch upcontributions. When you work longer, you have the abilityto delay the start of your Social Security benefits.

If there is a need to file for Social Security earlier, ifpossible, the best option is to have the spouse who isearning lesser of the two to start taking Social Security at66 years old. Making the choice to receive Social Securitybenefits between the ages of 62 and 65, while still working,could reduce the benefits received.

For every year a pre-retiree delays Social Security benefits, the

initial amount he/she will receive increases by about

8%.

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The Impact of Heath Care Costs on your Savings

The cost of health care is a large expense that many tendto overlook.

A 2017 published study by the Employee BenefitResearch Institute (EBRI) outlined that in order to have a50% chance goal of covering health care expenses inretirement a 65-year-old man would need $72,000 insavings and a 65 year-old woman would need $93,000.

To have a 90% chance of having enough savings to coverhealth care expensed the 65 year old male would need$127,000 saved and the 65 year old female would need$143,000 saved. Those are large numbers to account for.

Between deductibles, premiums and other

expenses, your savings can take a

big hit to cover health care expenses.

Managing Money in your 60s

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How is your Portfolio Allocated?

The general rule of thumb is that as you get older youroverall portfolio mix should favor bonds.

While that general theory is true, you also need tobalance that with the fact that we are all living longer andthe implication of downgrading equity exposure could goagainst your long term goals.

Ultimately, you should be able to sleep well at night andnot worry about the stock market. You have a plan and itis important not to lose sight of that plan and makeirrational decisions.

At this stage of your life your investment

principals may seem to be much

like they were when you were younger –

you are not investing for the next 5 years, you

are investing for the next 10, 15, 20 years.

Managing Money in your 60s

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