Not long after turning 35, you may begin to earn significantly more than when you started your career. You may have your student loans paid off, you may have the children out of daycare (less childcare expenses) and you may have been promoted or worked your way up to higher seniority in your profession. You can then expect your earning levels will continue to climb, right up until your mid-fifties and retirement (barring an accident, lay-off, or other unexpected crisis).
This means there is a 20-year window when you should be setting meaningful goals and maximizing contributions to your financial portfolio.
Instead, many fall into the pitfalls of squandering these peak earnings years. Below is a checklist of things people commonly do once they are making comfortable incomes. Ask yourself – is your financial independence and retirement in danger from committing any of the familiar practices below?
Considering, or in the process of a major home renovation?
Starting to buy luxury items that you denied yourself while establishing your career (new car, boat, or fancy toys)?
Buying a vacation property?
Doing away with your budget now that you’re earning a lot more?
Paying for your kids’ vacations, cars, weddings, etc.?
Funding your kids’ lifestyle (i.e.: paying cell phone bills, car insurance, credit cards, etc.)?Spending down, or avoiding creating an emergency fund?
Making only minimum payments on your mortgage?
Spending all of your bonuses and other windfalls (tax refunds, inheritances, etc.)?
Still leaving unused RRSP contribution room at the end of each year?
Still owing on your RRSP home buyer’s loan or similar program loans?Refinancing your mortgage with a longer amortization?
Not setting up RESPs for your children (or grandchildren)?
Contributing to RESPs below the threshold for the government’s 20% RESP matching grant?
Not reviewing or updating your will?
Filling your portfolio with low-return, safe investments?
Not establishing a list of financial priorities for your peak earnings years?
Deciding to retire early?
Getting rid of your life insurance after paying off your house?
If you answered ‘yes’ to more than a few of the questions above, it may be time to speak with a Financial Advisor. They can help you prioritize and achieve the financial and life goals that you have for yourself and your family. It is essential you do this well before you fall into habits that can quickly degrade your chances of a stress-free and happy retirement.
Brooklyn Scott is a Financial Advisor/Mutual Funds Representative for Lewis & Jones Group/Desjardins Financial Group/Desjardins Financial Security Investments Inc. in Killarney, Manitoba.
Mutual funds are distributed through Desjardins Financial Security Investments Inc. For insurance products, Desjardins Financial Security Investments Inc. acts as a national insurance brokerage agency.