If you were born between 1981 and 1996, you’re now likely moving into your prime earning years. The late 20’s through early 40’s bring a busy, exciting phase of life. In many cases, you’re building a family and growing your career. At the same time, you’re starting to think about the legacy you want to leave, your retirement plan and how you’ll send your kids to college.
While research shows you are saving and earning more than your parents1, (woohoo!), are you preparing for the future you want? How can you ensure you are on track to make the most out of these important decades?
3 FINANCIAL HACKS TO OPTIMIZE YOUR PRIME EARNING YEARS
To get you started in the right direction, here are three things you should be doing to optimize and protect your savings in your prime earning years.
1. WHOLE LIFE INSURANCE BENEFITS YOU TODAY AND IN THE FUTURE
When many people hear life insurance, they think it’s something to put off until later. Life is so busy right now, it’s the last thing on your mind. However, it can not only provide helpful financial protection for your loved ones if you happen to pass away prematurely, it can also help you diversify your portfolio.
As you pay for your policy, your cash benefit builds tax-deferred. You can use this cash as collateral for a loan to, say, open a new business or buy a home. Further, the premiums are guaranteed to never increase once you purchase the policy and the death benefit is permanent.
Term life insurance can be an attractive choice for millennials who are looking for affordable coverage. This may be a great option if you’re not at a place to commit to permanent, whole life insurance. While with a term life policy you get coverage for a defined length of time, there are policies that can be converted to permanent life insurance for part or all, of the coverage period down the line too.
2. PROTECT YOUR INCOME
Your ability to earn income is your most important asset. Most people don’t think about until it’s too late is what would happen if they became disabled and could no longer work. How would you continue to support your family and yourself? Would you need to drain your savings and retirement? A small payment into disability insurance ahead of time can help protect your savings and ensure you remain financially stable if the unexpected happens.
3. OPTIMIZE YOUR RETIREMENT ACCOUNTS
One of the best saving strategies is to contribute to retirement accounts. The main options are Individual Retirement Accounts (IRAs) and 401(k) employer-sponsored plans.
If your employer offers a 401(k) program, any contributions you make (up to $19,500 in 2021) won’t count towards your taxable income. This lowers the amount of taxes you pay and can potentially even drop you into a lower tax bracket.
If you opt for an IRA, you can contribute up to $6,000 per year (as of 2021) which may be tax-deductible. Limits apply if you exceed the income limits or are covered by a retirement plan at work.
Additionally, many employers offer a match to employees up to a certain percentage of their salary that they contribute to the company 401(k) plan. Be sure to look into your employer match rate and contribute the minimum required for a match, which will double your contribution—and growth power.
GAIN CONFIDENCE ABOUT YOUR FUTURE
Your prime earning years are not going to maximize themselves. While you are busy growing your career and doing what you do best, a great way to take inventory of your finances and ensure you’re on the right track is by talking with a financial professional. A trained eye can review your income, savings, insurance, budgets and more to spot opportunities. They can then help you figure out how to best balance your needs today with your dreams for the future.
Brought to you by The Guardian Network © 2021. The Guardian Life Insurance Company of America®, New York, NY
2021-118003 Exp 03/23
Bahney, A.; A quarter of Millennials who’ve saved have amassed $100,000. Here’s how they planned to spend it.; Jan.2020;
CNN Business online: https://www.cnn.com/2020/01/30/success/millennial-saving/index.html
Whole life insurance is intended to provide death benefit protection for an individual’s entire life. With payment of the required guaranteed fixed premiums, you may receive a guaranteed death benefit and guaranteed cash values inside the policy. Some whole life policies don’t have any cash values in years one or two. Whole life insurance should be considered for its long term value. Early cash value accumulation and early payment of dividends depend upon policy type and/or policy design, and cash value accumulation is offset by insurance and company expenses. Consult with your
Guardian representative and refer to your whole life insurance illustration for more information about your particular life insurance policy.