How You Can Succeed Like a Pro in 2020

I thought you may be interested to know how an experienced (25-years) financial planning professional goes about planning for financial success in the New Year.

MY GOAL – Live a balanced lifestyle, enjoying life today while saving for an uncertain tomorrow.

My peace of mind starts with a detailed analysis of where I am financially, and confirming that I am on track to attain my financial needs, wants and wishes.
I begin by taking a look at my net worth and comparing it to where it was one year ago. I start by looking at the bottom line and then work my way into the details. Every asset or investment I own is attached to funding a goal or goals. Have you aligned your investment accounts with your specific goals? Better yet, do you have specific financial goals with dollar figures attached?

Future Goal Planning

I look at my retirement plan assets, how much I contributed and what the new rules are for the coming year. In 2020, the limits were raised to $19,500 with a $6,500 over age 50 catch-up. I use the Roth 401k (Why I Love my Roth 401k) for my contributions. This means I do not take a current tax deduction in exchange for the money being tax-free when I take it out. I run my planning software “What if” scenarios to make sure I am on track to be financially independent at my goal age. I don’t plan on ever retiring. There are several variables I play “what if” with including rates of return (pre & post retirement), inflation, taxes, and the year I hope to be financially independent.

With three kids (ages 21,20 & 18), I look at my 529 college savings plan balances and run my calculator to see if I am where I want to be with their savings plans compared to what it may cost. It’s a great feeling to know that despite having three kids in college at the same time, I have their colleges paid. It took years of automatic savings plan contributions to make that happen. I’D BE HAPPY TO ANALYZE YOUR COLLEGE SAVINGS PLAN FOR YOU.

I review my Health Savings Account to make sure it is growing like I want it to. I want it to be worth $100,000 at age 65, so I can get some new body parts if the wear and tear of playing basketball require some replacement parts. Thanks to a fantastic year in the stock market I’m almost there way ahead of time. Why Health Savings Accounts are Fantastic for Retirement!

I also have specific accounts set up for gifts to my children if/when they get married. We are not paying for their weddings, but will give them some cash to spend any way they like when the time comes. Expensive Wedding Reception is a Poor Financial Decision

In all of these cases, I look at which accounts need more fuel (monthly savings) to successfully attain their goal and up them accordingly. Ideally, I recommend you increase what you are putting away each year if/when you get a pay raise. Many people do not have a lot of money outside of their 401k, so they should consider creating or adding money to these accounts.

Lastly, I look at my total debt as compared to last year and like to see that number shrink every year. Debt is not necessarily bad, especially when it’s real estate or business debt. When you are ready to retire I suggest you have no mortgage to deal with. Mortgage Payment is a Retirement Killer

Current Lifestyle

Everybody makes tradeoffs with their spending. For me, I don’t care that much for dining out, but always save money for things I like most like golfing and travel. I make sure to set aside money for these things. Do you make sure you have money set aside for what’s most important to you?

As I woke up to 2020, I realized I am getting much closer to some of my biggest ticket financial goals. It feels great to know that I have saved enough for all three of my kids college as that has been weighing on my mind for a long time. It has definitely kept me from spending more freely. Now that I feel comfortable with having that goal funded, I feel like I have the permission to “live a little”.

As a new Empty Nester (Empty Nester Observations – First Impression) I plan on opening the wallet more freely in 2020; going to more concerts, getaways with my wife, Soni, and other fun things. Also, it’s time to make some long overdue home improvements that we’ve been putting off.

Planning is the key for me and my peace of mind.