Building wealth in retirement is not based off one single action. In fact, the decisions that you make today will have an effect on the opportunities that you may or may not have in the future. And today, I’m going to share with you the most critical decisions that you need to make at the key stages of life, and stick around because I’ll go through the five things that you can do today if you feel like you’ve missed some of these important steps. Age range 18 to 25. The key things that you need to focus on at this age range is, number one, create a budget.

It is so important for all of us, no matter where you are at in life, to create solid and disciplined financial habits. Now, whether you’re in your 50’s or 60’s, or just starting out, we all need to know exactly where our money is going each month, and the best way to do that is getting used to creating a monthly budget so you can see what sort of lifestyle that you can afford now and in the future. Number two, working on paying off your student debts. Now, I understand not everyone decides to take the college route, but if you are someone that does decide to go through college, chances are you’re probably going to have to take out some student loans. Now, I think back to when I first entered college and I decided to get a job, delivering pizzas just to help pay for books and to actually start helping pay off student debts.

So at this point, you want to start building towards that, especially as you graduate college, because if you’re not careful, that could be something that will follow you through the rest of your life. Number three, start paying into your investments and your retirement accounts. Now, if you find a job right out of school or right when you enter the workforce, and your company offers a 401(k) plan, the best thing that you can do, no matter how small, is take a portion of your paycheck and start contributing to that plan. Now, this is somewhat of out of sight, out of mind money because you can’t touch that money until you’re 59 and a half anyways, but the best thing that you can do is actually automate that payment. Talk to your payroll or your HR, and have them take a certain dollar amount or a certain percentage out of your paycheck, and start accumulating within those retirement accounts, because as time goes on, you’ll see the power of compound interest.

And as I said, you can’t touch that money till you’re 59 and a half anyways, so over that period of time, you could see your wealth grow pretty substantially. Now, if you do have a company that you work for and they don’t offer you a company plan like a 401(k), you can actually start saving for retirement in an individual retirement account, also known as an IRA. Now, there’s multiple kinds of IRAs. If you meet certain requirements and make under a certain amount of money, you actually qualify for a Roth IRA. This, I think, is the best vehicle out there because essentially, you pay the tax up front, and then it grows in the Roth IRA for the rest of your life, and it is tax-free.

And again, you can’t touch this money till you’re 59 and a half, but if you can start building up that tax-free bucket early, you’ll be much happier when you get to retirement and when you actually need them. Number four, create an emergency fund. Now, I don’t care what age you are, life happens, and you need to have a particular fund within your plan that is specifically for emergencies. Now, you don’t want to put too much money in there. Most people want to get up to about three to six months’ worth of expenses, so that way, if they do lose their job that they are covered, but this is essentially a rainy day fund for you to tap into in case you need it.

Now, number five is staying out of credit card debt. Now, I understand that credit is a major part of our society, and it is necessary, but you can get yourself into a lot of trouble and owe a lot of other people money, and the reality of it is, is if you owe people money, any money that you make and start to build up is not your money because you’re going to have to pay off those creditors at some point. So if you decide to utilize credit, make sure that you’re managing it, paying it off monthly. In fact, there’s a lot of cards out there, credit cards that offer travel points and things like that. If you can be disciplined on it, it’s a great way to get free travel and perks when you’re taking trips and things like that, but make sure that you’re staying on top of it and don’t get in too deep of a hole.

The next age range, 26 to 40. 26 to 40 can be some very fun years. You may be starting a family, looking to buy a house, you getting deeper into your career, maybe getting promoted, you finally figured out what you want to do with your financial career, and you’re starting to build towards that retirement goal. So there’s a lot of key money moves that you can make that’ll help push your financial future forward. Number one, buy a house, buy a condo, or buy some form of property.

When you’re buying property, you want to try and buy cheap. Now, that may be an interesting thing to say in today’s current real estate market, and I understand how difficult it can be, especially if you live in the state of California, trying to buy a home, but make sure that you’re doing the best that you can, saving up for it, and if you do have the opportunity, look to buy something. When it comes to your place of employment, you want to continue to contribute to your 401(k)’s or your company plans. Each time that you get a bonus or a raise, add some to your savings, whether it be in your Roth or that 401(k), because as you start to make more money, you want to build up the amount that you can accumulate as well along the way. Number three, if you have a spouse, sit down and make time to devise a financial plan.

And I know in a lot of households, one of the people in the family is in charge of the finances, but it’s so important that you both know what is going on, because as we said prior, life happens. Number four, if you’re starting a family, number one, get life insurance. So that way, if anything happens to you, your surviving spouse and your kids are taken care of and are able to either stay in their house or have the financial means to not have to change their lifestyle. Number five, if you’re starting a family, start building a college fund for each kid. Even a small amount each paycheck can add up over 18 years.

Number six, remember, at this stage in life you are in growth mode, and time is still on your side, so make sure that when you are investing, you are taking risks and that your mindset is in growth. Now, the most important thing in this time of life is build a foundation. I very much understand that there’s a tug of war between living for the now and building for your financial future, and it can be very frustrating if every dollar you’re putting towards trying to save for a house, so we do encourage you to find a good, happy life balance between social things that you like to enjoy, but also putting a money away for your future retirement. Age range 41 to 55. Now, at this point in life, you’re progressing through your career, you’re probably getting into those peak earning careers, you’ve seen some more promotions, the kids may be graduating school and getting ready to fly the coop, so you may find yourself in a very interesting time, and there’s some key decisions that can be made here that will set you up for the upcoming retirement years.

Now, number one, during these peak earning years, you want to start taking advantage of the catch-up contributions within your retirement accounts. Now, the catch-up contributions begin at age 50, so if you have the opportunity to contribute more into those retirement accounts, take that time to do so. Number two, this is also a good time to focus on any large remodeling projects that you have. A lot of times when we meet with people, they want to do all these projects as they’re entering retirement, but we encourage you that if you can do that while you’re still bringing in income from a paycheck, that that is the best time. Number three, focus on paying down your home mortgage.

Look, I understand there can be tax write-offs and things like that, but the people that we deal with that have their house paid off in retirement are much more content than people that still have to pay for a mortgage each month. Number four, set up a trust for your family. This is one of the most important things when building a financial plan, because if something happens to you, you want to make sure that you have the direction of what happens with your assets. Number five, this is also a key time to try and work on getting out of debt. Look, we talked about earlier in the podcast how important it is to manage your credit card debt, and especially at this stage in life, you need to start working on getting that back to zero, so that way, when you get to retirement and into those initial retirement years, that’s one less thing that you have to worry about.

Age range 56 to 70. Now, this is a time that is very critical, because now, you are finishing up your working career and entering a whole new phase of life. And to be honest, I’ve been doing this a long time, and I understand that feeling emotional, mentally drained, stressed out are all very common symptoms when you are planning for your retirement, but not only from the decisions that you’ve made throughout the rest of your life, there are a lot of key decisions that can be made today that will make or break whether or not you are going to run out of money by the time you leave this earth. Here are the key things that you need to consider. Now, before even talking about dollars and money and things like that, you need to figure out what your retirement is going to look like.

Look, every day when you get into retirement turns into Saturday, and that’s a lot of time to fill, so you need to decide if you’re planning on volunteering, going back to work part-time, if you want to travel, and if you’re married, that’s definitely a conversation that you need to have with your spouse because you want to make sure that you’re both on the same page on how you’re going to spend your retirement days. In this stage, you need to understand that you’ve been working for 35 to 40 years, and you have been in growth mode, but as you enter retirement, you need to switch your mindset, because now, you are in a preservation mode. Now, that doesn’t mean that your investments still won’t appreciate, but you’re no longer contributing to your retirement accounts because you’re no longer working. So now that lump sum that you walked out the door of your employer, we need to figure out how that money is going to last, and we need to plan for the long-term. The most important decision that you can make is to build a holistic retirement plan, one that covers your income, inflation, taxes, investments, your healthcare, and your legacy.

That is everything that goes into a retirement blueprint. With respect to your income in retirement, social security, a very big topic these days. Now, depending on when you decide to turn on your social security between the ages of 62 and 70, there’s a lot of key decisions and a lot of strategy that needs to go into this. A lot of people just think that, “Oh, I turned a certain age, let me go turn it on.” That could not be more wrong.

You need to work with someone or find out as much education on social security so that you’re making a good financial decision that help you, and if you’re married, your spouse. You’ll need to figure out what your future tax implications are. Taxes are a tough thing to plan for, because the truth is, taxes are always written in pencil, and we’re coming across more and more people that are paying more taxes in their retirement than they ever were while they were working. At this stage, you want to make sure that you’re taking care of all of your debt. Now, in the prior segments, we talked about credit card debt and making sure that you’re managing this.

At this point, you may be getting close to paying off all your debt, and I’m talking about your mortgage, and the debt that is owed on your house. So if you have the opportunity to pay that off, that’ll make your retirement a lot less stressful and one big less expense that you have to worry about. You need to determine your healthcare. Now, the age of 65, when Medicare becomes available to you, is a very important step when you’re planning for your retirement, so get educated on what Medicare might look like for you and what your premiums might be. Make sure that you have a legacy plan put together.

Those are your wills, those are your trusts. Make sure that you have the control and don’t leave it up to the state or the government to decide what happens with your assets. Age range 70 and beyond. Now, this is a very important key time of life because this is the fourth quarter. This is the final years of your life, and depending on how long you live.

The key points in this age range is that at age 70, your social security maximizes, which means it’s not going to grow anymore. Another key age is age 73, based off current legislation. At age 73, you have to start taking required minimum distributions if you’re born after 1951. What required minimum distributions are is when any of your tax-deferred retirement accounts, those are your 401(k)’s, your IRAs, your SEPs, you have to start taking distributions out of them, pay tax on them. If you do not, then you have to pay a 25% penalty of what the RMD was.

This is one of the biggest IRS gotchas that are out there, but we’re in a country that’s $34 trillion in debt, and they’re looking to tax any money that they can, and unfortunately, a lot of that is in your tax-deferred retirement dollars. Now, if you feel like you’ve gotten a late start or that you’ve fallen behind on some of these, here’s some things that you can do immediately to get started. Number one, get your budget created so that you know where your money is going each month. Number two, work on paying down your debt, so that way, you’re on the right side of zero. Number three, build an emergency fund in case life happens and you need to get something taken care of in a short amount of time.

Number four, maximize your retirement accounts and make sure that you’re contributing as much as you can while you can. Number five, create a retirement blueprint, one that incorporates your income, your investments, inflation, taxes, healthcare, and legacy. Look, building for retirement is not one single action. In fact, the choices that you make now are going to impact the choices that you have to make in the future. And when we’re building for your overall financial wealth, the three things that you need to do is eliminate your should-haves, your could-haves, and your would-haves.

Think about what kind of life that you want as you’re going through it, and what you want your retirement life to look like as well, because when you’re planning for retirement, the sooner that you can get started, the better off that you’ll be when you get there. If you want to see how we help our clients build for their future retirement plans, go to our website at www.mosleywealthmanagement.com and give us a call. If you found this information helpful, feel free to subscribe to the YouTube page, and please tune into our future episodes.