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Financial Benchmarks to Hit at Every Age

img_7572We all know how important it is to save for retirement but how many people can actually say they feel prepared? Work towards these financial benchmarks at any age.

The 20s – The Era of Broke

  • We all know that the 20s are where you’ve racked up a whack-load of student debt, credit card balances and likely purchased your first big-ticket item like a vehicle or an itsy-bitsy condo that can barely fit a single bed.
  • You secure your first horrible job and live paycheque to paycheque, but thankfully you’re fully launched into your very own nest.
  • The second major milestone is to doubled your income by the age of 30 – so from $40K to $80K.

The 30s – Debt-freedom & Getting Hitched

  • You should try to have $70K saved at 30.
  • Start saving 10 per cent of your GROSS income (before taxes) and bump that up by 1 per cent each year. Use your pension program through work, an RRSP and TFSA.
  • Achieve debt-freedom from credit cards, lines of credit and student loans.
  • Choose a life-partner and hire a financial advisor together!
  • Save up a 10 to 20 per cent down payment.

The 40s – The House

  • You should try to have $300K saved by 40.
  • Save 20 per cent of your GROSS income so that you are maximizing your RRSP and TFSA limits WITHOUT leverage.
  • Start investing in stocks and bonds vs. mutual funds or other expensive managed products.
  • And yes, buy a home. It’s like a forced savings plan because the act of repaying a mortgage forces you to reduce your outstanding mortgage balance, thus pushing your net worth higher every month.The only reason this would not work in your favour is if you borrow back the equity – typically through a low-rate line of credit or consolidation loan – that you’ve put toward your house.

The 50s – Burn Your Mortgage

  • You should try to have $700K saved by 50.
  • Pay off your mortgage and help send your kids to school.
  • Maintain your savings of at least 20 per cent.

The 60s – Get Ready For The Beach

  • Yes! Once you’re mortgage-free, bump up savings to 30-40% of income.
  • You should have $1.4 million saved by 60 and $2 million by 65.
  • Transition portfolio from stocks and bonds that are higher risk to lower-risk “fixed income securities” – these are investments that kick-out a regular stream of income that you can use in retirement.
  • Understand your pension, CPP and OAS benefits.

 

Published on TheSocial.ca September 23, 2016.