As October has come to an end, it’s a time for us to look back and acknowledge that it was National Financial Planning Month. It is always the perfect time to review your finances and take action for better financial success – you can never start too early.

To properly commemorate this important month, we’ve spoken with Chad O’Connell, a Senior Investment Advisor with Dopkins Wealth Management, LLC. Chad and his team are ESC’s financial advisory partners and work closely with ESC’s clients to assist with their adoption into ESC’s high value, low-cost 401k plan.

During our conversation with Chad, one common theme was “Start now and start early.”

ESC: “What advice would you give a young person starting out in their career from a financial planning perspective?”

Chad:” If a young person has the opportunity to participate in any type of qualified retirement plan, you have to do it, you just have to do it!  Study after study has shown that, the longer you wait, before you start putting money aside for retirement, the more difficult it’s going to be, and the bigger the sacrifice that you’re going to have to make in order to be able to retire comfortably.  If you start in your mid-20s, that, you probably only need to save 5 or 6%,, if you start in your 30s that 5% becomes 12% and your mid 40s that percentage now becomes roughly 17%!”

ESC: “Simply saving and beginning to save early is the first step.  What’s the next step?”

Chad: “Creating a budget would be the clear next step.  As an investment advisor, I can’t tell you how many clients I work with who are in their 50s and 60s who have trouble budgeting today, and for the first time, have to go through an exercise of what is their budget and what are our expenditures?  And based on what we’re spending now, do we have enough to live in retirement based on our lifestyle? It’s a pivotal part of your retirement planning so you need to know where you’re spending your money.”

ESC: “What would you say to young, first-time parents as their family begins to grow?”

Chad: “One of a family’s biggest expenses that they can plan for early on is the cost of a college education. The benefit of an education and it’s cost can literally affect the whole family.  Consider this, It’s kind of ironic in the last 12 months, how inflation has been in the news.  The impact is huge on everything including everyday necessities like groceries and gas.  We’ve been in a historically low interest rate environment, with low inflation…but no longer.  I don’t think anybody really understands when for the last 20 years, inflation is running at roughly 2%, yet college tuition expenses have been increasing at an average of 6-7% every year!  Private schools’ tuition is between $50-70,000 and in-state public school tuition is around $23,000 per year.  It wasn’t so long ago, when it was only $3,000 a year!”

ESC: “What should parents do?”

Chad: “Young parents need to start planning and get the rest of the family involved, especially grandparents.  It shouldn’t fall solely on the backs of the parents themselves.  That’s where it should start.  Opening up a 529 account (or multiple accounts), is the best way to do that.  If you live in New York, using the New York State direct plan, you’re going to get that state tax deduction.  New York is working with Vanguard so you know that you’re going to get some quality investments and some relatively lower costs, so that they’re not eating away at the savings.”

ESC: “Thanks Chad.  This has been a great conversation.  Financial planning is clearly the key to a comfortable retirement.  Let’s continue the conversation.”

Chad: “Happy to help!”