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20s: Student loan debt
Borrowing money for college can be a smart investment, but be cautious, or a loan you took out in your 20s can cause a lot of stress -- to you and your budget -- when you get married, buy a home or save for your children's college education.
Do this instead: Beware of those seemingly friendly repayment terms that stretch out for 3 or 4 decades, says Brandon Moss, vice president of wealth adviser management at United Capital Financial Advisers headquartered in Newport Beach, California.
Financial advisers say a good rule of thumb is to borrow no more than the average annual starting salary for workers in the career field you're pursuing. That way, you'll be more likely to repay the loan within 10 years and keep the monthly payments at a manageable 10% of your gross income.
ADVISER SEARCH: Ready to pay off those loans? Find a financial adviser today.
30s: Overspent, underinsured
"This is the decade where keeping up with the Joneses starts to be a problem for a lot of people," says Greg DeJong, a financial adviser at Savant Capital Management in Naperville, Illinois, of consumers in their 30s. "It may show up in the price tag of family vacations or camps for children."
Inadequate protection against risk is another common, costly mistake among people in their 30s. Moss notes that at that age, facing disability from an accident without health insurance, for instance, can have much more devastating financial consequences than a stock market plunge from which you still have years to recover.
Do this instead: If you want to stay out of the in-over-your-head camp, take stock of what you can realistically afford, and stick to your spending plan. Do a thorough assessment of your health, disability and life insurance needs, and take advantage of any employer insurance benefits available to you.
40s: Competing financial pressures
In our 40s, many of us become part of the so-called "sandwich generation."
"You have middle-aged adults sandwiched between aging parents and their kids, having to decide what they should fund first," says Kimberly Foss, CFP professional with Empyrion Wealth Management in Roseville, California. "Should they be funding their mother's convalescent care because she has Alzheimer's, or should they be funding their children's education? It's always a difficult situation."
Do this instead: The pressures of those 2 sets of financial obligations can end up squeezing out your retirement savings plan. But Foss always likes to remind clients why they shouldn't forget to pay themselves first while they're helping family.
"You can find loans for the kids," Foss says. "Getting help for your aging parents is much more of a challenge, but it's out there. But no one is going to loan you money for your own retirement."
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50s: Stock market jitters, job market woes
In your 50s, as your retirement date gets closer, you may get more nervous about the impact of the volatile stock market on your portfolio.
And, many workers 50 and older who lost jobs during the recession underestimated how tough it would be to recover. When they got downsized, so did their retirement saving.
Do this instead: DeJong urges clients in this age group to hold steady with their investment strategies.
"They need to resist the urge of trying to time the markets or pulling money out during the inevitable stock market downturns," DeJong says.
More aggressive job hunting might have helped one of Foss' clients who was laid off at 50 and assumed it would be fairly easy to replace his job. He took his time looking, living off his severance pay. But he ended up being out of work an entire year, forgoing $23,000 worth of funding to his 401(k) and $6,500 to his IRA, she says.
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60s: Piecemeal financial planning
A "silo approach" to financial planning -- where a different adviser handles each component separately -- is often one of the biggest barriers to financial success in your 60s, DeJong says.
Do this instead: "This is really the time to be coordinating investment strategy, retirement planning, tax issues, the estate plan and insurance matters," DeJong says.
Larry Rosenthal, president of Rosenthal Wealth Management Group in Manassas, Virginia, says that during this decade, you need to focus on ensuring your investment portfolio and other sources will produce a reliable income stream during your retirement.
This can be a complicated exercise, so hiring a professional adviser can help make your financial plan more holistic and your retirement more secure.
"Take a look at your assets, liabilities, income and expenses, and see what you're on pace for," Rosenthal says. "See how much you can actually afford during your retirement years."
ADVISER SEARCH: Need help? Find a financial adviser today.
70s and older: Long-term care, fraud
The cost of long-term care has ruined many retirees' dreams and expectations of living out their golden years in care-free comfort. A 2016 Genworth survey found that the median annual cost of a home health aide is $46,332, an assisted living facility costs $43,539, and a semi-private room in a nursing home costs $82,125.
Seniors also often become the targets of financial scams that threaten to separate them from their nest eggs. And sometimes the children of seniors who "rob" their retirements.
"I am dismayed at how many of my clients in their 70s are pulling money out of their assets to prop up their children," DeJong says.
Do this instead: Before you reach retirement, factor the estimated cost of health care and long-term care into your financial plan. Consider getting long-term care insurance and taking steps to protect your assets by consulting an elder law attorney.
It's important for seniors to communicate that long-term care and family-related expenses threaten their own prosperity, as well as that of their adult children. After all, if the nest egg is depleted early, the children may one day have to supplement their parent's income.
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