Getting Your Financial House in Order
Gen Xers have been in the workforce for two to three decades. Many have families, and some are starting to see retirement on the horizon. With all the demands on their time, however, it is all too easy to overlook or put off monitoring their financial progress to date.
For some, it can be an uncomfortable and time-consuming process, especially if you’re concerned about meeting your financial goals. But when talking about reviewing your finances, the old adage, “Sunlight is the best medicine,” rings true.
No matter if you’re feeling ahead, on track, or behind schedule going into this process, you’ll emerge with a renewed confidence. You’ll know exactly where you stand and what items may need attention before retirement.
Conducting a successful review includes assessing your current situation, gathering the necessary documentation, and implementing actions that will fuel your progress.
Assessing your current financial position
The process begins with a thorough review of all your assets, income sources, liabilities, and expenses. Be as honest and detailed as possible throughout this process.
- How much of your savings is in readily available cash?
- Are you adding to your savings regularly?
- Have you contributed to workplace retirement plans?
- Are you contributing enough to receive any employer match?
- Do you have other non-retirement investment accounts?
- What are your current sources of income?
- Will you be eligible for Social Security or have a pension in the future?
- What is your current level of debt?
- Mortgage
- Student loans
- High-interest credit cards
- Are you carrying large balances from month to month?
- How much does it cost to run your household?
- Monthly bills
- Tuition payments
- Elective spending (eating out, club memberships, travel, shopping, etc.)
Gather appropriate documents
Once you have completed your assessment, compile a list of any supporting documents regarding the items listed above. This can be particularly useful if you plan to engage with an advisor. The documents might include:
- Recent tax returns
- Mortgage statements
- 401(k)/IRA/Roth IRA statements (including current holdings and investment options)
- Statements for non-retirement investments
- Pension and/or Social Security estimates
- Credit card statements
- Property tax bills
- Bank statements
- Current Wills or Trust documents
Implement actions to fuel progress
Once you have done the work to complete a review and compiled the related documents, choosing the appropriate actions to take can bring you one step closer to achieving your goals. Because everyone has their own unique priorities, some may choose to focus on debt management while others look at college planning.
If you’re closing in on retirement, you may want to consider taking steps to build more cash savings or consolidate previous employer retirement plans into a single IRA. Perhaps all these areas are of concern for you. Working with an advisor may ease the burden of determining how much and when to focus on these objectives. If investments are involved, consolidating and outsourcing the management of those assets could free up more time to work on other areas.
Prioritize getting your financial house in order
It may seem like the demands on our time and resources are endless. For those in Generation X, there’s a golden but limited window of opportunity to get their financial houses in order with enough time to make necessary adjustments.
Christopher N. Ruedi
Financial Advisor
CFP®, CFA®, RICP®, MBA