Savoring your financial future: A focus on long-term savings goals.
- Sara Griffin, AFC
- Aug 26, 2024
- 4 min read
As we wrap up savings planning month, it’s time to shift our focus to the big picture—long-term goals that will impact your financial well-being for decades to come. Whether you're saving for retirement, your child’s college education, or other long-term objectives, a well-thought-out plan is essential. This blog will guide you through key strategies to help you secure your financial future.
Understanding the Importance of Long-Term Savings Goals
Long-term savings goals, such as retirement and college education, require a different approach than short-term or mid-term goals. The timeline is extended, the amounts needed are often significant, and the impact of inflation, investment returns, and other factors become more pronounced. This is where careful planning and strategic use of resources come into play.
It’s important to recognize that each type of savings goal is both independent and interdependent. You can’t solely focus on one goal and expect a healthy financial future. Instead, as you build up one goal, you may find yourself shifting focus to others over time. It is equally important to make sure that you and your financial partner have the same goals. It is important to be clear and to be on the same page for future savings planning. Questions that you might want to make sure you and your partner are talking about -
How much of a college education costs do we want to cover?
100% of a 4-year degree, 80% of the first two years of college?
How much of your current income do you expect to live on in retirement years?
What year do you want to be able to retire?
Are you saving for a future wedding expense?
Are you saving for any other long-term goal(s)?
It’s about clarity, balance, and adaptability.
Utilize Savings Calculators
One of the best tools at your disposal is a savings calculator. For retirement, the AARP Retirement Savings Calculator is a great starting point. It allows you to input your current savings, expected income, retirement age, and other variables to estimate how much you need to save to reach your retirement goals. This can provide a clear target and help you understand the impact of factors like inflation and life expectancy on your savings.
For college savings, understanding the time value of money is crucial. By calculating how much you need to save regularly to reach your target amount, you can adjust your savings plan accordingly. College savings calculators, such as those provided by financial institutions or the Government website, can help you factor in the expected increase in tuition costs over time and how your investments might grow.
Maximize Employer Benefits and other resources
If your employer offers retirement benefits like a 401(k) with matching contributions, take full advantage of this. Employer matching is essentially free money that boosts your savings without any additional effort. By contributing at least enough to get the full match, you’re accelerating your progress toward your retirement goals.
Additionally, if your employer offers other benefits like Health Savings Accounts (HSAs) or educational assistance programs, consider how these can fit into your long-term savings strategy. HSAs, for example, offer tax advantages that can enhance your savings, especially for healthcare expenses in retirement.
Have you considered how FASFA or scholarships will play into your expenses for college tuition? There are lots of different college funding options out there that children might be eligible to apply for tuition assistance. Considering these options may help you achieve your goals more easily.
Connect with a Fee-Only Financial Planner
Finally, as your financial situation becomes more complex, it may be beneficial to connect with a fee-only financial planner. These professionals are compensated solely by the fees they charge, not by commissions from selling financial products, ensuring their advice is unbiased. A financial planner can help you review your current savings plan, analyze your goals, and make adjustments to optimize your strategy for the long term.
Start Small and Build Over Time
Reaching all of these goals may sound overwhelming, especially if you haven’t been saving much. But like sipping a favorite cup of English breakfast tea on a cold morning or enjoying a great Syrah with a steak dinner, savings must be savored and focused on a little at a time. Start small, keep writing and updating your goals, and let your savings swirl in your account, gradually building up to bigger and better milestones.
Conclusion
Planning for long-term savings goals like retirement and college education is essential for securing your financial future. By utilizing savings calculators, maximizing employer benefits, leveraging reliable resources, and consulting with a fee-only financial planner, you can develop a robust strategy that aligns with your goals. Remember, the sooner you start, the better positioned you’ll be to achieve your long-term financial aspirations. And most importantly, savor the journey—each small step adds up to a future of financial security.
Leverage Reliable Resources
America Saves -
They provide great tips, resources, and information about how to get started with savings. You can even take a pledge to help you stay committed to your savings goals.
You will need to do some research to make this calculator useful. You will want to look up the average cost of tuition and the inflation rate for college education. This will help you input more accurate numbers.
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