Your twenties are an exciting time in one’s life and also an extremely important time to set the financial foundation for the rest of your life. In your 20s you must learn to transition from a lifestyle without significant responsibilities into the “real world” making your 20s a decade of tough lessons. Whether you’re on your own or still with your parents, trying to discover the best career or still in school you should look to your peers who have already been through it.

Here at Lighthouse Financial we believe this stage of your life is the “Building the Foundation” stage. Listed below we have five important ways you could help yourself build the foundation to achieve the ultimate goal of Financial Freedom sooner than later.

1) Pay Yourself First
The golden number is to try and save 10% of your annual income. One of the most important savings plans we should take advantage of are the “tax-deferred” savings plan your employer offers. Retirement may seem too far away to worry about, but the earlier you start, the better off you will be. Use the “Compound Interest Calculator” to see how much any savings each year could help you retire at the age you desire.

2) Have an Emergency Fund
This is something people of all ages struggle with, but it’s important for individuals to understand the consequences of not having an emergency fund at a young age. A general rule of thumb is to try and have 3 to 6 months’ worth of expenses tucked away and easily available when needed.

3) Establish Credit
Building good credit in your 20s will allow you to make those bigger purchases later on in life. You should start by selecting a good credit card and focus on establishing smart credit card habits. Make sure you learn the differences between bad debt, good debt, and acceptable debt. Avoid the bad, use the acceptable debt wisely, and take advantage of the leverage of good debt.

4) Always be covered with Health Insurance
Many individuals in their 20s feel invincible when it comes to health. What they may not realize is that medical bills are one of the biggest causes of personal bankruptcy. You should take advantage of the health insurance your employer provides and if they do not offer you should take a look at to see what kind of coverage you could afford. What many individuals do not realize is that health insurance is mandatory in the US, and individuals who choose not to have it are required to pay a fee of 2% of your annual household income or $325 per person each year. (Whichever is higher)

5) Invest in Yourself and your Career
Your career and your ability to create income is your greatest asset. In your 20s you should be more concerned with taking the job that offers you the most professional opportunity and not necessarily the highest salary. For many individuals, the biggest asset in their portfolio is their human capital. It is their ability to use their skills, experience, and talent to earn income throughout their lifetime. It is a great time to add to your resume by earning a master’s degree or taking professional certifications and training courses to broaden your professional horizons.


A Financial Advisor can help you to navigate your financial waters. Meeting with a Financial Advisor is an important opportunity to discuss your financial goals, any changes that may occur and when ready, prepare for retirement. Listed below are some helpful tips on how to prepare for a meeting with a Financial Advisor.

Write down your Financial Goals – prioritize your goals!
Some questions you may want to ask yourself and discuss with your advisor:

  • Are your investments tax efficient, low cost and the most beneficial for your specific needs?
  • Are you saving to buy a home? Do you need help or advice obtaining a mortgage?
  • Are you starting a new job or career? Do you need advice concerning your employee benefits (insurance, etc)?
  • Tax planning – do you have sufficient withheld from your pay?
  • Do you have loans (student loans or other) or debt that you want to pay off or pay down?
  • Do you have children that you would like to save for education expenses?
  • When do you want to retire? What lifestyle do you expect to have during retirement?
  • Do you have an emergency fund? How much should you have?

When you are ready to schedule a meeting with a Financial Advisor, these are some important documents you should gather to bring to your meeting:

  • A list of your Goals
  • Current: 401K statements, investment account statements, bank account statements, info for 529 savings, stocks, bonds, etc.
  • Monthly Expenses
  • Tax Returns (if your advisor doesn’t already have them)
  • Current employee benefit info and compensation info (latest pay stubs, SS, pensions, trusts, inheritance info)
  • Insurance policies – (Life, health, auto, home, umbrella, etc) (declaration pages usually have all important info)
  • Estate Plan documents (wills, Power of Attorney, Living Wills, Healthcare Directive, etc.)

At Lighthouse Financial Advisors, we always welcome new clients and very much appreciate our client referrals. If you know someone who can benefit from our services, please feel free to give them our information so they can contact us and get started on their journey to financial freedom!

Choosing the right age to start Social Security benefits is one of the most important decisions in your financial life.  Unfortunately, most people are tempted to claim as soon as they become eligible at age 62.  This strategy results in reduced lifetime benefits for you and your spouse and may have a lasting impact on your financial future.

If you can afford to wait till full retirement age (FRA) between 66 to 67, or better yet age 70, you can substantial increase your monthly benefit.  If you start social security at age 62, you will receive 25% less per month than if you waited till FRA.  If you can wait till age 70, then your monthly benefit will increase 32% more than FRA benefit.  For example, if your FRA benefit is $1,600 then you would receive $1,200 at age 62 and $2,112 at age 70.  It is tough to earn a guaranteed 8% annual return in this interest rate environment!

According to the Social Security Administration, at whatever age you start receiving benefits, you will collect the same amount of total benefits if you live to your average life expectancy.  The average life expectancy for a male turning 62 is 83.9 and the average for a female is 86.3.

Taking your Social Security benefit early may have a huge impact on your spouse.  The spousal benefit is limited since he is eligible for a percentage of your benefit and a lower benefit equals a lower spousal benefit.  In addition, if your spouse outlives you he would be entitled to your full monthly benefit for the remainder of his life.  This is known as the survivor benefit.  Also, if you claim benefits before FRA, you lose out on a very valuable strategy known as “file and suspend,” where you wait till FRA, file a claim then suspend the benefit immediately.  This allows your spouse to collect on your record while their own social security benefit grows and he can collect on the higher benefit at age 70.

The cost-of-living adjustment (COLA) is updated on an annual basis and a lower starting benefit equals lower increases in the future.

Ultimately, the right strategy depends upon several factors including retirement savings, life expectancy, career earnings and goals.  The key is to understand all your options before making a decision.