Leaving the Nest

After spending years in school, you are finally ready to spread your own wings, find your path in life and leave parental home. You have your first job, the first place you can call your own… Now what?

Now is the time to lay foundation for your financial security. Here are important questions to consider:

  • Disability insurance – does your company have it? Is it adequate? Most corporate plans provide up to 67% of salary coverage and it can be taxable income. There is short term and long term disability. This is by far the most important coverage – protecting your ability to earn income. Nearly 1 in 4 of today’s 20 year olds will get disabled by the time they reach 65.
  • Life Insurance – do you have dependents? If not, this item can be put on hold for now, unless you are one of the few that already acquired wealth.  In that case estate planning is in order and life insurance is an important tool.
  • Does your job come with a retirement plan? If it does it will most likely come in the form of 401k or 403b. A large portion of young people forget about this portion of their assets thinking they can’t afford to save. This is a huge mistake you won’t be able to get back the years that you skipped saving. Your first goal should be to maximize this contribution, even if you start small and increase savings gradually. This is especially important if your company matches your contributions. If that is so, not making contributions to your retirement plan is like throwing money out the window.
  • If there is no retirement plan, consider opening your personal IRA, even with small contributions. Years of tax deferred savings will help build a nest egg for your retirement.
  • Make sure your debt is managed well. Consider consolidating your college loans if you have them or consolidating your credit card debt on one with small interest rate. A good plan helps you pay down the debt – and you should use the money freed by this payoff to fund your savings.

Ready to discuss?