Key Financial Moves for Each Decade of Life

Whether you’re fresh out of college, 20 years into your career, or months from retiring, there are a few key financial moves you can benefit from at every age and stage of life. Understanding the value in making certain financial decisions at strategic stages in life is the key. Find out from a local financial professional what strategies you should make in each decade of life to ensure financial security, and hear from two women who set themselves up for financial success early on and learn how they plan to continue making their dollars count (and grow) in their favor.

Get out a pen and paper because you’ll want to take notes for this one!

In Your 20s: Getting Started

Fresh out of school, the 20s are often associated with freedom. The first job, the first paycheck, maybe the first house — everything feels new in this decade. Emily Dafferner, a CERTIFIED FINANCIAL PLANNER™ with Reliant Investment Management, says this is the decade to begin building strong financial habits. “Once you’ve set them, it’s hard to break them,” she explains. These habits include strategies like saving for retirement (aim for at least 10 percent of your paycheck going into a retirement account by your late 20s) and managing monthly cashflow so your balance never creeps below zero. Also, this is the decade to begin developing solid saving habits. One of the best ways to make this a part of your financial routine, Emily says, is to automatically draft a portion of your paycheck into a savings account each month. “Plan to save. If you wait until the end of the month, it’ll be easier to spend it all.”

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In Your 30s: Grow and Build

With a couple of years of “adulting” under the belt, the 30s often represent a stronger sense of stability. And although retirement might still feel far off, it should be top of mind when it comes to your finances. Instead of allocating 10 percent of your salary toward retirement, Emily suggests increasing that number to 15 percent if you can.

Avery Sorenson, a young professional who also juggles a calligraphy side-hustle, says sticking to a budget and aggressively putting back cash for an emergency fund and retirement have given her the financial freedom to thrive in her 30s. “With a budget, I have the freedom to spend money on shopping or entertainment because I know that I have already planned out how I am going to pay for all the essentials each month, and for months to come,” says Avery, who started Art of the Alphabet during the onset of the Coronavirus pandemic. “Now I have a six-month emergency fund, which allows me to feel a sense of security, knowing that I can face any monetary hurdle that may come up.”

Establishing a firm budget can also help combat something that plagues many 30-somethings: lifestyle creep. “By ‘lifestyle creep,’ we mean lifestyle spending that comes when you get a raise and spend it rather than save it,” Emily says. In other words, keeping the “keeping up with the Jones’s” feelings at bay in your 30s is paramount.

Other areas to keep in mind during your 30s are 401(k) growth and insurance. If you have a career pivot, don’t cash out your 401(k), as this could disrupt the compounding process. In regards to insurance, Emily says, “This could look different whether you’re single or married, but make sure you’re adequately insured for unexpected disability or loss of life.”

The 40s: Accumulation

Older kids, established careers and finally finding a “forever home” … welcome to your 40s. This is the decade to max out 401(k) savings, save for kids’ college (without touching your retirement fund), get your estate plan in order and diversify your savings. “Now that you’ve hit your stride in your career, it’s time to really prioritize saving for retirement,” Emily says.

Mendy Walden, a 40-something stay-at-home mom, says having a lump sum savings account for vacations, car tag renewals, kids’ summer camps, car maintenance and other predictable expenses helps her family have financial security. “It takes the stress out of Christmas, vacations and purchasing all of those not so fun adult expenses,” she explains.

As a mother of four, Mendy is also quick to point out that kids don’t get cheaper once they’re out of diapers. “Their clothes and activities are more expensive, and then eventually cars and insurance come,” she says. “Start planning and saving now. With an 18-year-old in her senior year of high school, we have realized how fast the years go by!”

Establishing a solid college savings fund without dipping into your retirement is critical while in your 40s, Emily adds. Also, now is the time to get your estate plan in order. “We all think we’re invincible until we’re not,” she says. “Now is the time to think about having the appropriate documents in place if you haven’t already.”

If you’ve been saving since your 20s, now is also the time to begin diversifying your accounts — both your holdings and your account structures. “It’s best not to have all your eggs in one basket!” Emily says.

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The 50s: Peak Earnings

You’ve finally arrived. Now is the time to channel your inner J-Lo, who, let’s be honest, makes 51 look like 21. These are your peak earning years. Now is the time to maximize your savings, continue to prioritize retirement and take advantage of those nice “catch up” contribution rules of retirement savings, which can be up to $6,000 a year! “What you do in your 50s and the proceeding years will determine what you can do in your 60s and 70s,” Emily explains. “Now is the time to eliminate debt, especially any non-mortgage debt.” (And if you can pay off the mortgage, even better!)

These are the years to consider meeting with a financial planner if you haven’t already to make sure you’re on track. A planner can help you think through the details of your retirement planning and answer questions like, “Have I saved enough?” “When can I reasonably retire?” “What do I do about social security or Medicare?”

Your 50s are also a great time to review your insurance — especially life insurance, disability insurance and long-term care insurance.

The 60s: Growing Older in Bliss

By the time you hit your 60s, there’s a chance you could have some grandkids, maybe a wildly successful business empire or perhaps you’re just now getting in touch with who you’ve always wanted to become. No matter where you find yourself, this is the decade to take stock of where you are and plan to finish strong. Revisit retirement accounts and make adjustments, consolidate and simplify financial accounts, and perfect your estate plan. “Bring your kids into your estate plan,” Emily suggests. “Make sure they know your wishes, especially if any of them are to serve in any official capacity. This is a crucial decade for making sure estate plans are in order and that family members know where important documents are located.”

This is also the decade to enroll in Medicare (eligible at 65) and social security (at chosen entry date).

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The 70s+: The Golden Years!

Pass the champagne! You’ve worked hard to get here, and now it’s time to celebrate a life well-lived (or finally visit that foreign country you’ve always dreamed of). Take advantage of the early retirement years and enjoy the activities now that you might not be able to as older age sets in. “Have a plan for your time,” Emily suggests. “You’ve spent all these years working with minimal free time, and now you have all the free time in the world.” Sometimes new retirees struggle with this adjustment, so it’s important to have hobbies and trips planned out so you can keep a schedule.

Also, don’t forget to take those IRS-mandated retirement account distributions. Occasionally revisit your drawdown plan to make sure it’s still working for you and will last for years to come.

No matter which decade you find yourself in right now, remember it’s never too late to save and build a strong financial foundation.

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