Five years ago, you all gave me great advice on what to do with my finances as an early-career professional. So far, so good! Now what?
Here's what I did based on your wonderful advice in 2015, plus five years of career growth:
1) Got a Roth IRA, invested mostly in index funds, and contributed the maximum allowable amount every year (not yet in 2020 though, see below)
2) Continually upped my contribution to my 401(k), now at 15% of income
3) Got some good credit cards and pay them off in full every month. My credit score is in the high 700s.
4) Have one year of typical living expenses saved in my high-yield account
5) Easily(!) weathered an unexpected five-figure(!) expense last year when my pet died after a complicated illness requiring extensive treatment.
Here's where I'm at now:
1) Entering my thirties with more than the recommended 1x my salary saved.
2) Working in an industry that is vulnerable to Covid-19. So far, signs are good I will not lose my job, but in a situation like this, things can change any moment.
3) Previous "facts of the case" are still the same. Still no debt. Still zero interest in homeownership, buying a car, a blowout wedding, going to grad school, or having a kid.
4) The biggest life change that I've gone through is that I'm now in a long-term relationship and cohabiting. We've kept everything separate so far, but my partner is in even better financial shape than I am, makes about the same as me, and is on the same page as me about life choices. Splitting the rent also allows me to save a lot more.
5) The second-biggest life change I've gone through is that my parents are now elderly and have retired. They are in very good health but I know that could change. They also care for my adult sibling, who may or may not need long-term care (I'm not really sure; that's a whole other question). Their finances are also in very good shape. They are extremely paranoid about talking about money (see: "feral child raised by wolves" in previous post) but I know they are wealthy and not in debt.
Here are my questions:
1) Oh hey, I'm in the US and our economy is probably going to collapse. Should I wait to contribute to my Roth until it does, and "buy low" as they say, or is it better to contribute now? What else should people do differently in anticipation of a very bad economy? (I'm talking about a Great Depression-type situation, not a "no election in November, democracy collapses, end of the US as we know it" nightmare scenario, at least for now, and I don't think it's really possible to prepare for the latter anyway.)
2) What should I know about investment accounts that are not retirement accounts? I assume I don't actually want to keep saving in a high-yield savings now that I'm up to my necessary funds for if I lose my job. What are the other options?
3) How realistically should I be looking at retiring early? What, if anything, should I do differently if I'd like to keep that option on the table?
4) What should I talk to my parents about? What do I need to know about their wishes for care, should something go wrong? Is there something special I need to do financially to prepare for the possibility of financing their care or my sibling's? |
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