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Financial review at any age

Date posted:  8/3/17 04:30:00 PM Here are some ideas of how to conduct a financial review at every age.

Although keeping a tab on your finances is always a good idea, this can turn into more of a chore the busier we get. To ensure you monitor your finances, designate a specific time to review.

Here are some ideas of how to conduct a basic annual or semi-annual financial review at every age:

In your 20s and 30s

The early decades of adulthood are the most important times to save as much as possible. To do that, you need to understand the basics of the financial world and learn how to make the most of your income.

  • Take some time to understand the basics of long-term investing. The Investor Protection Institute offers free guides on how to use stocks and mutual funds to save for retirement, education and more.
  • Outline a monthly budget that adds up your total income and breaks down expenses. Budgeting is easier than ever with digital and online tools.
  • Make saving a priority every month - try to set aside one month of basic living expenses in a savings account to use only for emergencies. Once you've built one month, shoot for three months, then six and so on. A good amount of cash savings leaves you protected against unexpected events.
  • Contribute a fixed percentage of your paycheck to a 401(k) plan, if your company offers it. If they offer to match contributions, do your best to contribute at least that much. At a young age, these savings will grow quickly.

In your 40s

Once you've reached middle age, you should have the basics of money under your belt. Now it's time to simply keep things organized.

  • Check your retirement accounts once per year and your investments.
  • If you haven't already, look into a life insurance plan to cover your children in the event of an accident. Taking out a policy to cover your family until the kids are old enough to be financially independent.
  • Start drafting a basic retirement plan, paying special attention to where your income might come from and how you could reduce expenses.

In your 50s

Your 50s are a prime time to eliminate debt and increase savings as you approach retirement.

  • Workers 50 and older are allowed to make "catch-up" contributions to their 401(k) or individual retirement account (IRA), up to $6,000 per year.
  • Review Social Security and how to take advantage of benefits. Taking distributions as early as possible might sound beneficial, but waiting just a few years can be much more profitable.
  • Consider downsizing to a smaller home or less expensive location, or selling off unwanted and necessary possessions.

Your 60s and beyond

The traditional retirement age of 65 is far from a rule. As you enter your 60s, take a look at your finances and general wellbeing to see if you can continue working a few more years. This additional work will give your investments and Social Security benefits more time to grow. Meanwhile, do all you can to reduce costs and prioritize health and happiness.