Advice for your 30s: Protect your assets

This week we look at the 30s.

• Do a reality check. Self-assessment is important. Once you enter your 30s, it’s important to have greater clarity about your goals, taking into account your current income and asset base. You may be married at this point and it is equally important to make sure you and your spouse don’t have competing goals. Talk openly, before marriage, about your goals, how much debt each of you have, and how you will manage the money — separately, a joint account, or a combination of the two.

• Catch up on saving. When it comes to retirement, it’s about catching up. A career change, marriage, the birth of a child, or other seen and unforeseen events may occur that may set you back financially. When this happens, set new spending controls. For instance, if you’ve started your own business, establish a retirement plan in order to set aside tax-deductible, tax-deferred monies. As your business grows, consider other retirement planning.

• Establish and maintain an emergency reserve/opportunity fund. While those who work for a company should strive to have three to six months of living expenses set aside, the self-employed should shoot for as much as a 12-month cushion.

• Protect your assets. Without proper protection, you can forget about achieving your retirement dreams. Life insurance is necessary for a growing family. Increase yours as needed to meet liquidity needs in the event of a premature death.

Maintaining adequate disability income insurance is important as well. Particular attention should be paid to the elimination period, benefit period, and the policy’s definition of disability. You must also maintain the appropriate amount and type of liability insurance. This is especially important for business owners and individuals with rental property.

• Learn from your parents. Many in this age group have parents who are retiring. They are seeing how prepared or unprepared they are for it. It’s a wake-up call. Many realise that their parents will need their financial support or that their parents may have to go back to work. The best case scenario is that your parents have prepared well for retirement. Unfortunately, that’s not always true. Start preparing yourself now.

• Have a family spending plan. Be careful of overspending, especially on the children. And don’t put saving for your child’s college education before saving for your own retirement. "Just like when you’re on an airplane and they tell you to put on your oxygen mask first and then help your child, it’s the same with retirement," says one adviser. "You want to provide for them, but not to the detriment of your own retirement. You can get a loan for a child’s education, but you can’t get a loan for your retirement. With private school education costs in the stratosphere, many parents will have tough choices to make. Figure out your priorities."