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How to Set Long-Term Financial Goals

How to Set Long-Term Financial Goals

Setting long-term financial goals is a necessary component to ensuring stability for you and your family. Without clear goals, it becomes easy to overspend, under-save, or miss out on other financial opportunities. 

Whether you’re looking to buy a house, plan for retirement, pay off large debts, or a combination of all three, you need achievable long-term goals to get you there. The earlier you identify and start planning for your goals, the more likely you are to reach them.

Key takeaways

  • Long-term goals are necessary tools for reaching financial milestones.
  • The SMART method is the best way to break down your goals into achievable steps.
  • Even if you must readjust your goals later in life, starting to plan as early as your 20s is best.

What are long-term financial goals?

Long-term financial goals are those set for five or more years in the future to ensure financial prosperity. These goals include planning for retirement, creating generational wealth, establishing an estate plan, or paying off a large debt, such as a mortgage or student loans. 

How do short-term financial goals differ from long-term financial goals?

Short-term financial goals are those you can achieve in a more imminent period, usually within a year. These can include creating a budget, paying off smaller debts or establishing an emergency fund. While you may also be contributing to long-term goals at the same time, short-term goals differ in that they are completed in a much quicker timeframe. 

Long-term financial goal considerations by age

Time is your biggest asset when it comes to long-term financial goals. The earlier you begin, the easier they will be to achieve. However, it is never too late, and your goals may need to be adjusted over time. Below are considerations for long-term goals based on age.

Long-Term financial goals in your 20s

Generally, your early 20s are the very beginning of your independent financial journey. Knowing where to begin and what goals to set can be challenging. You don’t have to have it all figured out. This is the best time to start learning and taking small steps towards securing your financial future. 

Your 20s are a good time to:

  • Begin retirement planning by opening a retirement account and calculating approximate retirement needs. 
  • Start saving for a down payment.
  • Pay off small debts.
  • Set goals for career advancement.

Even though retirement might feel a lifetime away, it’s best to start preparing early to maximize savings and reduce stress down the road.

Long-term financial goals in your 30s

Your 30s are a time when many settle into their careers and make higher-than-entry-level wages. Ideally, increased financial security will allow you to feel comfortable in working towards long-term goals. 

At this age, goals may include:

  • Paying off student loans.
  • Setting a retirement age.
  • Improving credit score.
  • Continuing or increasing retirement savings contributions.

With a stronger understanding of your aspirations and adult needs, your 30s are a good time to solidify and work towards long-term goals.

Long-term financial goals in your 40s

Life is full of responsibilities in your 40s, from asset ownership to a growing family. Many people review their long-term goals at this time and adjust them for changing needs. 

At this stage, consider:

  • Paying off any remaining non-mortgage debts.
  • Maximizing your earning potential.
  • If you have children, investing in your child’s college fund.

Due to life circumstances and changes, many people at this age take the time to reassess their long-term goals to ensure they still align with their needs. If so, this is a good time to make any adjustments.

Long-term financial goals in your 50s & 60s

At this stage, you are approaching retirement age and should begin to see your long-term goals come to fruition. This is the time to focus on achieving the end stages of your goals and maximizing resources. 

Goals at this age include:

  • Becoming entirely debt-free.
  • Reevaluating your estate plan, including your last will and testament. 
  • Planning for long-term care in old age.
  • Ensuring your lifestyle is sustainable through your planned retirement income.

Why are long-term financial goals important?

Long-term goals are important to avoid stress later in life and ensure you are prepared for retirement and old age. For example, income from Social Security is usually insufficient and must be supplemented with other income. Without long-term financial goals, you could be left without enough money to sustain your lifestyle during retirement.

Tips for setting financial goals (SMART)

Setting goals is one thing; how to actually achieve them is another. According to a poll by NerdWallet, while 9 in 10 Americans (90%) said they set financial goals for 2025, 45% of those goal setters said they either “aren’t on track to hit their biggest money goal or they aren’t sure.”

The SMART method is a framework that can help make long-term goals less daunting. SMART stands for specific, measurable, achievable, relevant, and time-bound. 

For example, if your goal is to buy a house, how will you get there? Creating a SMART goal can help. Rather than just saying “I want to buy a house,” the SMART approach would be “I will buy a house with a $42,000 down payment by saving $700 a month for the next five years.” 

Bottom line

Long-term goals are necessary for ensuring financial security throughout life, but figuring out how to achieve them can be daunting. Horizons Wealth Management’s financial planning and retirement planning services can help you understand, plan for, and achieve your long-term goals.

Long-Term Financial Goals FAQ

What is an example of a long-term financial goal?

A common long-term financial goal is having enough money for a down payment on a house. Others include saving for a child’s college education or saving a certain amount of money for retirement.

What is the first step in creating a successful long-term financial goal?

Use the SMART method. Rather than setting goals with vague objectives, SMART goals require you to break down the process. When you have a clear intention and steps for how you’ll get there, your goals become much easier to achieve. 

Can an investment manager help my long-term financial goals?

Yes, an investment manager can help you reach your long-term goals. They can provide you with individualized strategies that work for your financial needs. 

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Are you Ready to Retire?

Retirement Ahead

Key Takeaways

  • Achieving financial stability for retirement requires a thorough review of savings, investments, and debt management to ensure you can sustain your desired lifestyle without financial stress.
  • Regular health assessments and planning for future medical needs are crucial in ensuring that health issues do not hinder the quality of life during retirement.
  • Clearly defining personal interests, hobbies, and travel plans helps create a fulfilling retirement experience by allowing you to enjoy activities you love while staying within budget constraints.

Retirement is a significant milestone, marking the transition from years of dedicated work to enjoying a more leisurely and fulfilling chapter of life. But how do you know when you’re truly ready to take this step? Deciding on retirement isn’t just about reaching a certain age or hitting financial targets; it’s also about emotional readiness, lifestyle planning, and personal goals.

This guide will help you explore key indicators such as financial stability, health considerations, personal aspirations, and social connections that signal your readiness for retirement. By examining these factors comprehensively, you’ll be better equipped to determine if now is the right time for you to embrace this new phase with confidence and excitement.

Financial Stability

Achieving financial stability is the most critical factor in determining your readiness for retirement. This involves a thorough evaluation of various financial aspects to ensure you can maintain your desired lifestyle without the worry of running out of funds.

  • Savings and Investments: Review all your savings accounts, including 401(k)s, IRAs, Roth IRAs, and any other investment portfolios. Ensure these accounts are well-diversified to mitigate risks while maximizing returns. It’s also essential to calculate how long these funds will last based on current withdrawal rates.
  • Retirement Accounts: Understand the rules governing withdrawals from different types of retirement accounts, such as required minimum distributions (RMDs) for traditional IRAs and 401(k)s starting at age 73.
  • Emergency Fund: Maintain an emergency fund that covers three to six months’ worth of living expenses to cushion against unexpected costs or market downturns.
  • Pension Plans: If you have access to pension plans through previous employers or government jobs, get detailed information about payout options—whether lump sum or monthly payments—and how they fit into your overall income strategy.
  • Social Security Benefits: Calculate when you should start claiming Social Security benefits since this decision significantly impacts your monthly benefit amount over time.
  • Inflation Impact: Consider inflation’s impact on purchasing power; plan accordingly by investing in assets that are likely to outperform inflation rates over time.

It’s best to consider consulting a financial advisor to evaluate your retirement readiness from a financial perspective. Luckily, Horizons Wealth Management can help answer the right questions. 

Debt Management

Effectively managing debt is crucial for a stress-free retirement. Here are key considerations to help you assess and manage your debt before retiring:

  1. Current Debt Inventory: List all existing debts, including mortgages, car loans, credit card balances, personal loans, and student loans.
  2. Mortgage Status: Evaluate how many years remain on your mortgage and consider paying it off early or refinancing for better terms.
  3. Credit Card Balances: Aim to pay off high-interest credit card debt quickly to avoid costly interest charges that could burden limited retirement income.
  4. Car Loans: Pay off vehicle-related debts ahead of time, reducing monthly expenses.
  5. Consolidation Options: Explore consolidating multiple high-interest rate accounts under one lower-rate agreement, reducing overall payment obligations and freeing up cash flow opportunities elsewhere within budget constraints imposed otherwise.

By systematically addressing each aspect—mortgage status, credit cards, car loans, consolidation options, budget adjustments, and seeking professional advice—you’ll enter retirement free from financial burdens. This will allow you to fully enjoy your newfound freedoms and pursue your passions with peace of mind and contentment.

Health Status

Assessing your health status is a critical factor in determining your readiness for retirement. Good health not only impacts your quality of life but also influences financial planning and lifestyle choices during retirement. Here are key considerations to help you evaluate and plan around your health as you approach this significant milestone:

  1. Current Health Assessment: Begin with a comprehensive evaluation of your current physical and mental health. Regular check-ups, screenings, and consultations with healthcare providers can provide insights into any existing conditions that might affect your retirement plans.
  2. Chronic Conditions: If managing chronic illnesses like diabetes, hypertension, or arthritis, ensure they’re under control through consistent medical treatment and monitoring adherence to prescribed regimens.
  3. Future Healthcare Needs: Consider potential future medical needs and anticipate the costs associated with ongoing treatments, medications, therapies, interventions, surgeries, and possible rehabilitation. Be prepared for unforeseen emergencies that could arise unexpectedly and significantly impact your overall well-being. Each case should be individually assessed to tailor a plan specific to your unique personal context, ensuring you are well-prepared both now and moving forward.
  4. Long-Term Care Planning: Explore options for extended-care scenarios that may require assistance with daily living activities. Consider home-based services, assisted living facilities, and nursing homes. Evaluate the coverage provided by insurance policies specifically designed for such eventualities, including Medicaid, Medicare, private insurers, supplemental plans, and hybrid plans that combine various types of protections. This approach helps maximize benefits while minimizing gaps in coverage and reducing exposure to risks.

By addressing these areas comprehensively, you can ensure a well-prepared transition into retirement with minimized risks and maximized benefits.

Lifestyle Goals

When considering if you’re ready to retire, defining and planning for your lifestyle goals is crucial. Retirement offers the opportunity to pursue passions, hobbies, and activities that you may not have had time for during your working years. Here are key aspects to consider when evaluating your lifestyle goals:

  1. Personal Interests and Hobbies: Reflect on what activities bring you joy and fulfillment. Whether it’s traveling, gardening, painting, golfing, or volunteering—ensure these interests can be sustained financially and logistically in retirement.
  2. Travel Plans: If exploring new places ranks high among your priorities, map out the destinations you envision visiting. Estimate the costs involved for the duration of stays, transportation, accommodation, food, and other related expenses. Plan accordingly to fit within your budget constraints comfortably without overextending resources unnecessarily or unwisely.

Thoroughly defining and planning for your lifestyle goals is essential when determining if you’re ready to retire. By identifying personal interests and hobbies that bring you joy and carefully mapping out travel plans while considering financial sustainability, you can create a fulfilling retirement experience. Proper preparation ensures that your post-work years are spent enjoying the activities you love without the stress of overextending resources.

Bottom Line

In conclusion, preparing for retirement involves more than just financial planning; it encompasses evaluating your health status, managing debt effectively, and defining clear lifestyle goals. By thoroughly assessing each of these areas—ensuring financial stability through diverse savings and investments, maintaining good health with proactive medical care, addressing outstanding debts to reduce stressors, and planning activities that bring joy—you can confidently transition into this new chapter of life. A comprehensive approach allows you to embrace retirement fully equipped to enjoy newfound freedoms while pursuing passions with peace of mind and contentment. At Horizons Wealth Management, we can help you reach your financial goals through our various services, such as wealth management and portfolio management. Let us help you kickstart your financial future today. 

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When Should You Start Saving for College?

So when should you start saving for your kid’s college? The short answer is, as soon as possible.  However, you must fund your retirement first!  If you’re already putting enough away for retirement, start saving for your child’s college fund as soon as you can.

Click here to learn more about saving for your children’s college.  

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What the Supreme Court’s fixes for retirement savings may do to your 401(k)

SUPREME COURT RULES WORKERS CAN SUE OVER HIGH 401(K) FEES

On Monday, The Supreme Court of the United States ruled that workers can sue their employers over high fees in their 401(k) plan offerings. Workers have complained for years about being forced to choose high fee investment options in their 401(k) plans because of a lack of other options. In a 9-0 decision, the justices decided that employers could be sued if their retirement plans offer employees mutual funds with unnecessarily high fees.

Learn More Here.

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Should I Pay Off My Debt or Start Investing?

Should I pay off my debt or start investing? This question, perhaps more than any other, has plagued investors for generations. Ironically, it is one that can be easily decided by using a bit of simple math.

Read more here.

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Warren Buffett and Bill Gates Agree – This Factor Was Most Important for their Success

Warren Buffett, Steve Jobs, and Bill Gates have all attributed their success to one factor. In fact, this one trait is behind the success of all people that have performed massively better than the average person.

Click here to find out what the trait is and how you can put it into practice in your own life and investing.

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9 in 10 Americans Underestimate Their Hidden 401(k) Fees. When was the last time you checked the fees on your 401(k)?

Who’s looking out for your 401(k)?  Do you know who is legally responsible for plan losses and excessive fees?  Do you understand the fees being charged to your account?  When was the last time you checked the fees on your 401(k)?

All too often, workers with 401(k) accounts are in the dark. They view their retirement plan as a benefit and are unaware they’re paying for the privilege of investing for retirement. Many times, the 401(k) plans get neglected or pushed to the bottom of the list because the owner and Board of Directors are too busy with other tasks.

Many investors don’t realize that more than a half a dozen fees may be charged against their 401(k) account for recordkeeping, administration, investment advisory, brokerage and management services. These are often shaved off the top of the account’s investment returns, and never before seen by the 401(k) participants.

The Federal Government has been trying to enforce new regulations that require 401(k) plan providers to spell out the hidden fees workers pay.  The push for greater disclosure has been in the works for several years, and it has been a struggle.

Unveiling  investment expenses is particularly important for 401(k) participants in smaller companies. That’s primarily because many companies, especially small businesses, do not want to pay the thousands of dollars of operating costs; therefore, they set up retirement plans in which costs are paid by workers out of their investment returns.

All of this discussion is critical because 401(k) participants who pay just 1 percent more in fees see a significant impact on their retirement balance over their working careers.

Revealing these costs should cause workers to push their employers for a less expensive plan. That’s the takeaway for employees in all this. They should look over their reports and if they feel they’re not getting enough information, push for more. If they find their fees seem higher than average, they should talk to their plan administrator about lower fee options.

At Horizons Wealth Management, we feel certain that we can provide a better retirement plan for much lower costs.  We would be grateful for the opportunity to run a free cost comparison and analysis for your company to illustrate how much could be saved in your retirement plan fees.

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The Recipe for Building a $1 Million Retirement Plan

The 401(K) has become America’s number one way to save for retirement.  The stock market’s recent bull streak has not only pushed the average 401(k) plan balance to record highs, but also boosted the ranks of a new breed of retirement investor: the 401(k) millionaire.  To join this “Million Dollar Club,” you need to learn all the right ingredients to this recipe.

Click here to read the article.

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