Financial planning is a lifelong journey. Whether you’re just starting out in your 20s or enjoying your golden years in your 70s and beyond, making informed financial decisions sets you up for long-term stability and peace of mind. For this guide, we spoke with certified financial planners and wealth management experts to get their advice on smart money moves for every stage of life. From building credit in your youth to estate planning in your later years, ultimately, the most foundational investment you can make is in your own financial education and planning — an investment that will pay dividends throughout your lifetime.
20s
For many young adults, the 20s are a time of newfound independence and financial responsibility. Kevin Sittner, a Certified Financial Planner from Sittner & Nelson, a comprehensive wealth management firm, said the 20s are the time to develop good habits that form the foundation of financial stability. “This doesn’t mean completely foregoing fun expenses, but rather being mindful of where money is going,” Sittner says. “Creating a budget can be an effective tool to keep spending in check while still allowing for enjoyment.”
One of the most critical factors in financial health for young adults is establishing a strong credit score. A good credit score can be instrumental in qualifying for lower interest rates on car loans or mortgages, and is often required when applying for apartments or other rentals. “Taking some time to learn the various factors that go into credit scoring systems is a really wise idea,” Sittner emphasizes. With the prevalence of financial fraud and identity theft, staying on top of your credit score is more important than ever.
Use credit cards wisely to develop a good credit history. A person who is a good saver but has no credit history is at a disadvantage when applying for a loan. “It is good to regularly use a credit card, but you want to keep a low utilization rate as a percentage of your available credit,” says Sittner, who suggests using credit to pay a small monthly bill, like a Netflix account.
Paying down student loans is an important part of many people’s 20s. Balance that responsibility with ongoing savings for emergencies and retirement. The power of compound interest makes early retirement savings particularly valuable. Even small contributions of $20 a week can accumulate significantly over time. Be sure to take advantage of any employer-matched contributions. While saving for a home purchase can be a worthy goal, Sittner suggests it shouldn’t be a top priority for most people in their 20s. Even small steps like automating savings or gradually increasing retirement contributions can make a significant difference over time.
30s
While a parent’s first financial instinct may be to take care of their children by funding a 529 account for their education, Irina Pack, a Senior Financial Advisor with Merrill Lynch Wealth Management, stresses the importance of striking the right balance between saving for retirement and education, with retirement taking priority. “The truth is one can borrow for education, but not for retirement,” Pack says. “And parents can also help to repay student loans if their financial situation allows.”
When it comes to the hard decision of saving for college or saving for retirement, financial planners will almost always tell you to save for retirement first. It may seem selfish, but you’re actually keeping your kids from having to support you when you’re older.
Pursuing the American dream of homeownership often takes precedence in the third decade of life. But before you embark on purchasing a home, Pack stresses considering your personal situation and weighing the benefits of renting against the benefits of owning.
“If homeownership is the right path for you, I recommend having a few financial disciplines in place,” Pack says. “The first thing is saving. Start with an emergency account of about six months of living expenses, and accumulate funds toward a down payment. Owning a home comes with additional costs, some expected and some unexpected. Make sure that you have money in a readily accessible account so that you can take care of these without having to take out a 401(k) loan.”
Pack also recommends educating yourself on the difference between fixed-rate and adjustable-rate mortgage loans and to avoid spending more than one-third of your income on housing costs. Last, but not least, she reminds individuals in their 30s to not let homeownership jeopardize their future savings and other financial goals.
40s
Between caring for children, advancing in a career, and community and family involvement, your 40s can feel like a time where you are stretched thin. Yet your 40s are a prime time to assess your life goals and the steps needed to reach them. Quality financial advice in your 40s can improve the possibility that your future will match what you hope for.
“In your 40s, maximizing earnings is a good idea,” Pack says. “If your career is not headed in the direction you want, or you want to switch fields or start your own business, it is not too late.” However, she noted that while maximizing earnings in your 40s is important, maximizing savings is even more so.
This decade is a common time to have one or more children launching into adulthood and possibly college. “Helping college-aged kids take ownership of their financial future and financial decision-making is really important, no matter the family’s financial circumstances,” Pack says. “It is important for young adults to have their own financial independence and learn to navigate the connection between expenses, work, and financial discipline.”
Every situation is unique and comes with its own complexities and solutions. There are potential effects on financial aid in terms of how different accounts are counted towards a family’s financial contribution. “If financial aid is a factor for your family, then figuring out which accounts to distribute first is quite important,” says Pack. “If your family does not qualify for financial aid, then it is up to the family to decide what they will cover and where they want the student to contribute.”
From a practical perspective, families may choose to cover just undergrad education and then let their child take over on graduate education expenses. The right solution will depend on the family and their financial circumstances.
50s
Often considered the decade of peak earning potential, many individuals in their 50s find themselves at the height of their careers. And with the higher salary comes the ability to save more than in the previous four decades of life. However, people in their 50s are also often faced with new challenges, such as tuition payments, aging parents, and their own retirement needs. Because of this, it’s important to put money away for future healthcare and living expenses and use savings accounts with tax advantages. As you approach your retirement date, start saving through a retirement plan at work if you aren’t already, especially if there is a match available. Depending on income level, a financial planner might also suggest saving to a Roth IRA.
Once an individual reaches age 50, they are eligible to make even bigger contributions to their retirement plan in the form of an extra catch-up contribution. This extra contribution can help boost retirement savings and potentially help them save more pre-tax.
Financial planning for retirement often looks different for women, because women often take a break from their careers to raise children and many have experienced the wage gap in salaries that exists between women and men. Statistically, women tend to live longer than men, so combining making less over the course of working years with living longer, the importance of saving becomes even greater for women. A lot of times, women, as with men, are also in their peak earning years in their 50s, but they may not have been able to save as much in the past due to breaks from the workforce or lower wages. So, for them, taking advantage of catch-up contributions is even more important.
Pack adds that a spousal IRA for a non-working spouse may benefit couples where one of the parents chooses a less conventional career path, self-employment, or steps away from the workforce entirely. “This is especially important for women who tend to take on more of the caretaking roles,” she says.
60s
In your 60s, lifestyle takes center stage. It’s finally time for bucket-list travel and the kitchen remodel that’s been put off for years. Some people downsize their homes during this decade, while others move an elderly parent into a spare bedroom.
“In your 60s you’re going to be approaching retirement, so you want to assess what your current investment strategy is,” says Ken Jorgenson, an independent wealth management advisor at Centaurus Financial Inc. “And generally what drives changes to your portfolio are life events.” He notes a general shift in the 60s toward reducing risk in your portfolio and planning for income rather than growth. And for most Americans, income comes in the form of Social Security.
“At age 62 you can start to take Social Security,” he says. “You’ll want to have a conversation with somebody about setting an actual age. Most people have savings and a little bit of Social Security, but whether you take it early, on time, or later is really a question about what kind of resources you have.”
He adds that if you have substantial resources and longevity in your life, he says, you may decide to wait until age 70 due to the higher income benefit every year you wait to start collecting benefits. Beyond thinking about Social Security, Jorgenson stresses the need for individuals to make sure they’re applying for Medicare on time and anticipating that expense. “Medicare doesn’t cover everything, so you want to consider Medigap and Medicare Advantage plans,” he says.
70s and Beyond
While Pack notes that every person’s situation is unique, and priorities differ, having your estate attorney and financial advisor collaborate is essential in your 70s. “As your financial life becomes more complicated, trusts and legacy planning become much more relevant,” she says. “Do you have a family business or properties you would like to pass on? Are there highly appreciated investment assets? Is taking care of your family or giving back to a favorite charity important? How much do you care about tax efficiency?”
Long-term care needs become more important at this age, too, whether you’re managing health issues or not. You may start to consider moving to a senior community. At this age, individuals tend to look at how much they can reasonably take out of their portfolio and balance that with spending. “As you start to get older, your health care expenses start to go up and you’re whittling away on your nest egg,” Jorgenson says. The thought process becomes about making what you have last, he says, which means evaluating where expenses can be cut back or if income can be supplemented.
“One thing we try to have people in their 60s, 70s, and 80s do is to simplify how many financial institutions they’re doing business with,” Jorgenson adds. “Try to organize your financial life to be easy for you and your family. In your working years, you might have four different jobs and different accounts in different places. As you get older, you start to forget things, and when you advance into your 80s, that can be stressful.”
Jorgenson recommends having a budget and automating bill paying. Have a family meeting where you share important information with your loved ones.
What To Do When A Baby Is Born
Starting a college savings plan early is one of the most impactful financial moves new parents or grandparents can make. The most common vehicle for this is a 529 plan, which offers tax advantages when the funds are used for education expenses.
“It’s never too early to start,” advises Ross Anderle, a wealth manager with Sapient Private Wealth Management. “For college, you have about 18 years to accumulate those monies, so the earlier you start the better.” Set one up early, and other family members can contribute to it also.” He suggests that instead of just giving children cash for birthdays or holidays, relatives could split their gifts between spending money and 529 contributions.
The key to success is establishing a systematic savings plan. “Even if it’s a relatively small amount like $50 or $100 a month, it adds up significantly over time,” Anderle notes. Recent changes through the SECURE Act have made these plans even more flexible — if the funds aren’t used for education and the plan has existed for at least 15 years, the money can be rolled over into a Roth IRA, subject to certain limits.
Anderle’s other tips involve creating a new budget when you expect that you’re going to have a new baby or grandchild. Set aside time to update your wills, and investigate life insurance.
Financial planning is not a one-size-fits-all endeavor — it’s a process that evolves with your life circumstances. Whether you’re in your 20s focusing on building good financial habits, or in your 70s considering legacy planning, the key is to stay informed, adaptable, and proactive. It’s never too early to start planning for your financial future, and it’s never too late to make positive changes.
