You’re Out of Debt, Have Savings, and Are on Track for Retirement: So, What’s Next?

Marisa Torrieri

after financial foundationLast time you checked, you carried no credit card balances, had six months of take-home pay saved up in your emergency fund, and had been steadily increasing your retirement contributions every year.

Congratulations! You’re one of the lucky, financially diligent few who have your basic financial security numbers—that is, retirement, credit card debt and emergency savings—under control, and you deserve a big pat on the back. But the big question remains: Now what?

For starters, you should make sure you’ve really met those financial security needs. This means that on top of having six months of net pay saved up in an emergency fund and zero credit card debt, you should also consider being on track to replace about 85% of your income in retirement through regular contributions to a retirement account.

If that still sounds like you, that means you’ve likely got a cash stash that you’re trying to figure out a use for. Before you decide to start living a little larger, check out these four ideas for your extra dough from LearnVest Planning Services CFP® David Blaylock. They just might give you some options for smart decisions about your spending and saving.

1. Set New Financial Goals With Timelines

The basic financial security goals are similar for everyone. But beyond that, the plans you have for your money are all yours. What do you need and want in life? What is worth saving for next? Your answers to these questions can help you get started on financial goal-setting, the process by which you figure out which goals to focus on first based on what you want, when you want it.

“We always have goals beyond [basic financial security],” says Blaylock. “It could be college savings. Maybe we’re looking to purchase a home [and need the] down payment. Or maybe it’s saving for something special, like a large trip, a wedding or a new vehicle. Those are some common ones I see. Some people even want to save up to start their own business. There’s always a next-in-line goal.”

RELATED: Checklist: I Want to Set Financial Goals for Myself

  • kristen

    well, that sounds nice…

  • Gars

    In one college philosophy class we sat down and drew a lifeline for ourselves.

    It was part of a discussion on “the unexamined life is not worth living.”

    My line started at my current age, 20 and went to the average age of death for males at that time, 85.

    I had 65 years left! I’d never thought of that.

    So off I went. 1 more year of college, 22, 4 years of professional school, 26, 4 years to get established in my field, 30.

    55 years left. Marriage, kids? Another 20 years to raise kids. I was 50. Hopefully at least 4 years of college and maybe 4 years of graduate work, I’m 58.

    Yikes! Only 7 years until the then popular retirement age of 65… 20 years left.

    Aches, pains, medical issues, serious medical issues and then death.

    It was an eye opening 40 minute class that day.

    Thanks Dr. Arvid Adell.

    Still I was 20 with my whole life ahead of me. Looking that far down the road I could and in retrospect at age 56, did plan better.

    It’s a worth while exercise for anyone at any age to do.

    It’s been a great way to answer that interview question of Where do you see yourself in 5 years? I quickly explain my experience at age 20 and a brief overview of the entire life plan. Their question is designed to see if I’ve thought about 5 years in the future. My answer shows them I’ve thought about not only the next 5 years, but the rest of my life.

    • Lynne

      Nice post! I agree it is a very useful exercise to map out your lifeline based on where you are now and what you want in life.

  • Lynne

    I have known many people who live one day at a time, with no clear plan for the future. No clear-cut goal setting. Unfortunately, their finances tend to reflect that lack of planning – little to no retirement savings (age bracket 50-60), and generally living paycheck to paycheck. Any unexpected expense puts their finances into the red. Poor financial decisions such as buying too expensive a house to enjoy the good life, then defaulting on the mortgage when those large payments become too much to bear.
    Those same people look at me in bewilderment and wonder why I live so frugally even though I have a good income nowadays. It is because I have future goals that do not include spending everything I make. Also some of those same people criticize me for my financial habits, then a few get angry that I am not sharing the bounty with them. This last attitude is something I really resent. I made my choices, and they made theirs.

    • Gars

      The fly in the ointment is you may die tomorrow so while I admire your frugal lifestyle, make sure you have some enjoyment every day. Do what makes you happy after all that’s what your goal in life should be.

      • Lynne

        I agree Gars, every day can be our last. I do still enjoy life although work does take a bit too much of my time for my taste! Statistically speaking however, I will probably live another 30 years or more, so I am definitely preparing to support myself in retirement and have enough money to go places and have fun, probably way more fun than I have now. I will not be a burden on anyone else if I can help it.

  • charles

    Two things…#1.Have good health.(No Cigs ok?).#2 No matter how humble Have your House/Condo Paid off No Mortgage…If you have those two things..Then you are stupid to try and keep up with the ‘Retired Joneses”..It will be the little things in life that bring the most pleasure..Freedom from the rat race of working etc.