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Steps to Building a Financially Secure Future

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Saving and accumulating financial resources for the future is one of many goals that people juggle during their working years. An essential first step that many may overlook, however, is protecting what you already have now, as fully as possible. Without adequate protection, your financial future is left exposed to the risk of unexpected events. Here are some key do’s and don’ts for both protecting and investing your money, to simplify your path to creating a financially sound foundation for the future.

Protection Comes First

  • 1

    Start with your employee benefits at work

    If your job offers you benefits, your financial planning should begin at work. Not only has your company already done the legwork by researching and finding quality plans, but these plans are likely to cost you significantly less than what you might pay if you enrolled outside of work. These benefits can include health-related insurance as well as insurance to protect your finances, such as life insurance or disability income insurance.

  • 2

    Review your current life insurance coverage

    The framework of a sound financial plan begins with protecting yourself and your loved ones, and making sure they’re sufficiently covered. Do you have any life insurance through your employer? Have you purchased any additional life insurance beyond what your job offers?

    If you own term life insurance, it will protect your loved ones for a limited time period. Whole life insurance, a robust type of permanent life insurance, can provide guaranteed coverage for life with the potential to accumulate cash value, which is money you can use during your lifetime*. Besides helping you build a significant cash asset that’s not dependent on the rise or fall of the stock market, whole life insurance is also an efficient way to build a lasting asset and eventually leave a legacy to your loved ones.

  • 3

    Safeguard your income with disability income insurance

    Your income is your most valuable asset. If you weren’t able to work because of an illness or accident, it could be difficult to support yourself and any loved ones who depend on your income. Before you examine how best to invest the money you earn, make sure you protect it. With disability income insurance, which may be available through your employer, an illness or injury doesn’t have to mean financial catastrophe. 

  • 4

    Don’t leave coverage gaps

    After you’ve calculated exactly how much life insurance and disability coverage you already have, determine if they are sufficient to provide for yourself and your loved ones. Everyone’s needs are different – for example, if you have financial dependents and you’re in your 40s, you may need 15 times your annual salary. If you’re in your 20s, you may need 30 times your annual salary. If you don’t have substantial savings, life insurance and disability income insurance become even more important. Standard disability income insurance offered through your work typically covers up to 60% of your salary before taxes. If you identify that this isn’t enough, you can apply for a separate individual disability income policy, either through a financial representative or possibly at work.

Saving and Investing Comes Next

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    Save more to accumulate wealth

    To help you find more disposable income for saving, consider creating a budget – if you don’t already have one – and see where you can reduce your monthly spending. For example, if housing costs are consuming too much of your income, could you manage to live in a less expensive home or apartment, or pay off your mortgage? 

  • 2

    Open a brokerage account

    It doesn’t take much money to start investing. A brokerage account is an easy way to keep track of your money and take control of your financial life. It can combine multiple investments into a single account that houses all of your investment assets in one place. You’ll have a comprehensive view of all your investments through a single monthly statement.

  • 3

    Take advantage of tax-deferred investments

    If your employer offers a 401(k) or other retirement savings plan, be sure to contribute while considering other tax-favored savings vehicles. Deductions will automatically come out of your paycheck, and the plan may provide significant tax benefits that can reduce your taxable income. If you’re lucky, your employer may match some of the contributions you make to your plan, so be sure to take full advantage of that, because it may help your savings grow faster. Even if you have a 401(k), you can build more wealth by opening other vehicles. A traditional individual retirement account (IRA) may also provide you with tax deferral - or if you qualify, savings vehicles like a Roth IRA can give you tax-free withdrawals. 

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    Don’t put all your eggs in one basket

    Owning a wide variety of investments helps minimize the risk that any one individual investment can have on your overall portfolio. One of the most cost-effective ways to broadly invest in the market is through mutual funds. A mutual fund is a package of individual stocks, bonds, short-term investments, or other investment products that are managed by a professional fund manager.

  • 5

    Review your finances annually

    Take a close look at your insurance coverage – through work and independently – and your portfolio at least once a year and as your life changes. That way, you can be sure that your asset allocation, or mix of investments, is still appropriate to meet your long-term needs for building wealth. Even if your goals have remained the same, you may need to rebalance your portfolio if changes in the market have shifted the percentages of your portfolio that are allocated to stocks, bonds, and other investments. 

Talk to a Financial Professional To Help You Bring it All Together

Working with an experienced financial professional you can trust is the easiest way for you to feel secure that you’re making the best decisions on how to create the kind of financial future you desire. He or she can discuss all your options, recommend the ones that best meet your individual needs, and help you stay on track to achieve your goals. 

Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

*Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

All investments contain risk and may lose value.

Securities products offered through Park Avenue Securities LLC (PAS), member FINRA, SIPC.  PAS is an indirect, wholly-owned subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY.   Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.