Finance Choices
Sort your financial future by age 26
If you are over 26 but have not put in place basic plans to ensure financial security later in life, then start to worry.
That is the message from financial advisers who warn that those who fail to address their financial futures early in life could face a lifetime of struggling to catch up.
Financial advisers believe that the three pillars of financial planning ? saving for retirement, getting on the housing ladder and saving for the future ? should all begin well before a person reaches 30.
According to research by Prudential, they think that people should start a pension at age 22, buy their first house at 25, and start to save at 26.
However, the reality is somewhat different. The average age to marry, which is often a trigger to sort out finances, is 29 for women and 31 for men, while the average age of a first-time buyer is 34.
But if reading this causes you to break out into a cold sweat, you will find solace in the words from Prudential's UK executive director Roger Ramsden, who says it is never too late to start planning for your financial future.
"Planning early is key to a secure financial future, but it is never too late to start. For those of us who do seem past-it, we can still do an awful lot to improve our financial position; whether that is pay more into our pension, save more, or reduce our debts," he said.
"At the bright young age of 26, many youngsters are not yet fully aware of the benefits that starting a pension and savings scheme can bring.
"For one thing, few are aware of the significant tax breaks of a pension. It is only later that they look back and wish they had acted earlier to maximise their finances."
Those under the age of 26 should take heed of the experience of their elders, 42 per cent of whom wished they had reviewed their finances earlier in life. The 25 to 34-year-old age group felt this more than any other group.
Financial adviser Andrea Rozario said the ease of access to credit cards and loans, along with sophisticated advertising techniques, had caused saving to go out of fashion.
She said: "I agree with the advisers surveyed by Prudential in that the earlier you start planning, the better. And while it may not be possible for everyone to have started a pension, bought a house and started saving by the age of 26 ? it should certainly be on their radar."
That is the message from financial advisers who warn that those who fail to address their financial futures early in life could face a lifetime of struggling to catch up.
Financial advisers believe that the three pillars of financial planning ? saving for retirement, getting on the housing ladder and saving for the future ? should all begin well before a person reaches 30.
According to research by Prudential, they think that people should start a pension at age 22, buy their first house at 25, and start to save at 26.
However, the reality is somewhat different. The average age to marry, which is often a trigger to sort out finances, is 29 for women and 31 for men, while the average age of a first-time buyer is 34.
But if reading this causes you to break out into a cold sweat, you will find solace in the words from Prudential's UK executive director Roger Ramsden, who says it is never too late to start planning for your financial future.
"Planning early is key to a secure financial future, but it is never too late to start. For those of us who do seem past-it, we can still do an awful lot to improve our financial position; whether that is pay more into our pension, save more, or reduce our debts," he said.
"At the bright young age of 26, many youngsters are not yet fully aware of the benefits that starting a pension and savings scheme can bring.
"For one thing, few are aware of the significant tax breaks of a pension. It is only later that they look back and wish they had acted earlier to maximise their finances."
Those under the age of 26 should take heed of the experience of their elders, 42 per cent of whom wished they had reviewed their finances earlier in life. The 25 to 34-year-old age group felt this more than any other group.
Financial adviser Andrea Rozario said the ease of access to credit cards and loans, along with sophisticated advertising techniques, had caused saving to go out of fashion.
She said: "I agree with the advisers surveyed by Prudential in that the earlier you start planning, the better. And while it may not be possible for everyone to have started a pension, bought a house and started saving by the age of 26 ? it should certainly be on their radar."
posted by Bruce Wayne at 7:31 AM
Sort your financial future by age 26
7 Comments:
I turned 25 in Jan and I started my Roth IRA in Jan of this year, I am almost 100% debt free exept one truck payment so all i have left is a house and i have been looking into that. I guess you could say i am on track but i do know i could be doing better.
I bought my first shares at 18. My first and only house at 29. When I had to move from Navy housing to the civvy world and rent quadrupled.
As for the pension I plan on keeping paying the mortgage but instead of going to the bank it will go into investments when the time comes.
I save a little. No where near the 10%-20% recommended.
I have not met any of those targets, I just started getting myself together at 31!
I'm a little bit ahead of the game( knock on wood). Started Full roth contributions 2005 at age 19(turning 20 next week). Now working on building up my emergency fund. My plan is to get through undergrad with no debt and have full roth contributions every year. After that start saving for a house while in grad school and working full time.
Geez, when was that written? Most of the 26 year olds I know, at least in the NY metro area, are living at home. Buying a house anywhere in this area will cost at least 300,000. for the smallest thing available, if a developer doesn't buy it first to knock down and resize into a mcmansion.
Rules like that can't be applied across the board; I suspect the financial institution is selling pensions and savings vehicles. The notion that people get out of college, buy a house and start a pension to augment their social security (which will be non existant by the time today's 20 somethings get to retire) and retire at 65 is no longer viable. It's time that we started to look at this "natural progression" as far from natural or desireable.
I'm 22. I currently have a job -- but things have gone well and I've been accepted to Grad School, to start this summer. I've only been at my current job since August -- and so I'd get no matching if I started a 401k. I figured it was better to hang on to my money for now, as I know I will definitely need to be taking out loans to finance grad school (I'm guessing rates will be around 6-7% in 2 years when I'm done).
I do not plan to own a house when I'm 25 -- I will turn 25 two months after finishing my master's degree, then for my program I have a one year paid "internship" to become a nationally certified school psychologist. I will be 26 when that is over with -- and 26 when I start my real job then.
My boyfriend is also currently 22, he is in his 1st year of his Plasma Physics PhD program, which takes 5 years. He will be 27 when he finishes, assuming he finishes on time.
Who knows where we will end up after his PhD -- we may be moving to wherever there are national labs where he can work, so there's no use in buying a house until we know where we will live, and are famillar with the area to know where to buy a house.
Dawn, it sounds like your time frame is much more rational than this "financial institution", because you've planned what you have to do to get where you need to go instead of just assuming that buying a house is the next reasonable step.
(by the way, you might be surprised by student loan rates; mine, taken out in 2000-2003, started at 3.00 and went down to 2.something when I consolodated. Had I known, I would have taken more money out!)
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