Sample Goals and Benchmarks at Specific Ages

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Sample Goals and Benchmarks at Specific Ages

Published by sam - 08/11/07 - 05:11:43 am

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Putting It on Paper

Even when you recognize the need for financial planning, you may do little more than think about it at odd moments. But this kind of sporadic attention is more likely to culminate in a vague resolve to do something about it one of these days rather than in a specific

Table 7-1 Sample Goals and Benchmarks at Specific Ages

20-30 Years
Establish Credit
Open bank accounts
Purchase health, life, and auto insurance
Begin to formulate tax strategies
Set aside one tenth of income savings
Invest in an IRA or pension plan
Make a will

30-40 Years
Purchase primary residence
Review net worth and analyze cash flow
Establish children’s education fund
Review life insurance
Formulate strategies to save on taxes
Open a fund for emergencies
Accumulate a reserve to start business
Invest a discretionary income
Budget and reorganize finances.

40-50 Years
Take stock of your asset
Plan for income to increase and expenses to decrease
Invest in a vacation home or income property
Invest in tax free vehicles such as municipal bonds
Review and revise your will
Plan to travel

50-65 Years
Look for weak spots in retirement plan
Check with Social Security on benefits
Sell some assets and reinvest for future income
Evaluate whether to retain your home or purchase a retirement Home
Think about relocating
Review life insurance
Check your health insurance coverage
Consider early retirement
Revise your will

Retirement Years
Have adequate medical care and emergency funds
Continue working part time if possible or necessary
Shift assets and reinvest in income-producing vehicles
Enjoy activities you have put off for years
Review and finalize your will and your estate planning
Consider establishing a living trust
Consider ways to avoid estate taxes
A far more effective approach is to set aside some uninterruptible time and commit your goals and their timetable to paper.

The goals you set down should be a combination of realities and dreams. If you limit yourself to the realities that your current budget dictates, you are unlikely to realize any of your dreams. But if you include your dreams, you may find ways of modifying your budgetary constraints so that you can obtain them.
As we have noted, your goals, no matter how personal, are inevitably related to your age; a young two-income couple will set up very different goals from those of a single person approaching retirement age. This is why the plan you set down must be revised every few years. Each review offers you an opportunity to check your progress, recalculate your net worth, and revise your goals accordingly.
Although planning involves thoughtful discussion with your spouse, the point at which you draft your goals is not the time for it. Each of you, separately and independently, should prepare your own draft, and then your should bring them together. Although your two sets of goals may be generally compatible, there will inevitably be some differences, major or minor, in both the timing and the partners are committed more to finding solutions than to scoring a victory. Deft negotiation of differences may even serve to improve and enrich the plan or to make it more feasible. Successful negotiation can, for example, improve your financial situation be affecting a spouse’s initial decision about entering or returning to the work force. Or it may lead to a better decision on the issue of starting up a business or taking early retirement.

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November 8, 2007 | Financial Planning |

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