A recent NYT article asked financial writers to compress their long list of planning tips into a short list–one that would actually fit on an index card.
Before I list “Jerry’s Golden Rules,” it’s important to recognize that an individual should approach his or her financial life just like they would define a business plan. It needs to include all the usual elements:
Like any business plan, your financial plan needs to be reviewed periodically, especially as you move from one stage of life to another. So when a publication asks for a financial pundit to collapse their financial tips into a short list, I interpret that request as asking what strategies the investor ought to follow once their mission and objectives are set.
My key strategies for creating a successful financial life follow.
- Think of your financial life in a series of stages, each one building on the other–but each one having its own distinct financial strategies. Here are the five stages (with illustrative age ranges):
- Protect – ages 25 to 40
- Build – 40 to 55
- Transition – 55 to 70
- Early retirement – 70 to 85
- Late retirement – 85 on
- Use insurance-based solutions to complement your savings, including life insurance, long-term care, and income annuities.
- Take advantage of all tax-savings strategies. Also, minimize your fees wherever possible.
- Educate yourself. Very few, if any, advisors can address all of the above products or planning issues. Recognize that any plan you prepare will be outdated as soon as completed.
- Maintain the proper balance between your needs and desires, and what you may want to leave as a legacy.