As we journey through our working years, we typically have two major financial goals: To provide for ourselves during those working years, and to set aside some money for after we retire.
The budgeting process for those two functions is very different. For the short-term, it's all about prioritization and tracking expenses. For retirement, the idea is to maximize the amount being invested and to make sure it's earning the best possible return.
Many of us learn the first step from parents, consumer education, or sometimes trial and error. But the short-term strategies are easier to adjust because we're still working. If we reach retirement and don't have enough money, we could be in a real pinch; we may end up working long after we thought we'd already be on our own time.
Steve Adcock from ThinkSaveRetire says that to retire with a high income, there are a few things you need to know. First, a high income doesn’t mean you’re free from debt. There’s that “unwritten expectation to ‘look the part,’” that many fall into.
If you plan to retire with a hefty income, it’s your lifestyle that will dictate the outcome, not your income. Your income is one of the most important tools you have to build your retirement, and just because you have a big income, that doesn’t mean you’re rich.
That's where good investment advice comes into play. Simply socking away some cash into a passbook account isn't good enough. You need real investments that will provide good income with minimal tax impact, and Hal Hammond Sarasota is an expert that has helped many clients achieve just that.
His strategy includes starting early in the working years and continuing right into retirement with the same consistent advice. In those earliest years, he wants to build wise consumers who are positioning themselves for the long term.
He helps them see how those two financial goals--present and future income--are not independent but are in fact tightly linked. Consequently, he spends a lot of time counseling working-age clients on how to handle money appropriately in the 20's, 30's, and 40's. From there, he gets into the more direct steps of investment.
The first step is to have a solid understanding of yourself. Every investment involves an element of risk, and Hammond's goal is to educate clients in a self-assessment that helps them develop their own understanding of how much risk they are willing to tolerate--and at what point in life they need to pull back into low-risk options.
Hammond next focuses on investment education. He doesn't want his clients to blindly follow his suggestions when they don't know what they're dealing with. He works to get them to know a T-bill from an IRA, and to understand what the pros and cons of each instrument are. He'll also help clear the air about nontraditional financial options that can confuse people.
Moving forward, it becomes about retirement goals. The more you want to do in your golden years, the more money you'll have to have. Is your goal to be a jet-setter? To have a summer home in the mountains? Or do you just want to spend time with grandkids and volunteer work?
Whatever your goals, there is no right and wrong. Hammond just works to get clients positioned to reach them. That feeds back through their investment types and their tolerance for risk, as well as their financial habits today.
Investment is something that sounds simple at first. Set aside some money, invest it in something, and withdraw it down the road when you need it. Of course, it's anything but simple. It's a comprehensive task that begins on your first day of work and continues until your last day of life.
And because it is so important--and because it is a changeable economic climate--it's impossible to make the most of your retirement without seeking and implementing expert advice.