Age-Based Financial Planning Milestones

By Barbara O’Neill, Ph.D., CFP®, Rutgers Cooperative Extension, oneill@aesop.rutgers.edu

Similar to medical standards of care (e.g., having a mammogram starting at age 40, a colonoscopy starting at age 50, and regular blood pressure and bone density tests), certain age-based milestones can tell people the key financial planning action steps that they need to take at different ages.

The following financial activities often take place at various decades of a person’s life:

20s and 30s– Early retirement savings, debt repayment (e.g., student loans), and household formation

40s and 50s– Increased earnings, continued wealth accumulation, and launching of adult children

60s– Peak earning years (if still employed), preparation for retirement, and retirement

70s and Above– Life transitions (e.g., long-term care, widowhood, and death) and wealth distribution

Especially during later life, there are many age-related financial milestones. Examples include eligibility for catch-up contributions to tax-deferred retirement savings plans at age 50, eligibility for early (reduced) Social Security benefits at age 62, eligibility for Medicare at age 65, and required minimum distributions (RMDs) from tax-deferred retirement savings plans at age 70 ½. Like medical milestones, which are generally determined by research findings (e.g., clinical trial results), financial milestones are also grounded in facts, typically tax laws, legislation, and knowledge of the impact of compound interest.

Although actual timing will vary from person to person (e.g., I completed a Ph.D. program in my 40s), below are some suggested financial milestones to achieve during each decade of adult life. Milestones achieved at an earlier age (e.g., a good credit score and an adequate emergency fund) should continue during subsequent years.

Photospin/Ruslan Kudrin

Age 30

  • Financial independence from parents (e.g., independent living arrangements and no “subsidies” to pay household expenses such as insurance premiums and cell phone bills)
  • Student loan debt completely repaid or close to repayment (e.g., standard 10-year repayment plan)
  • A year’s worth of salary (1x) saved for retirement
  • A good credit history established with a credit score in the low- to mid-700s or higher
  • Regular saving/investing and at least three to six months of income set aside for emergencies
  • Educational credentials earned or near completion (e.g., certifications and graduate/professional degrees)
  • Have current estate planning documents and life insurance to protect dependents or co-signers, if applicable
    Photospin/Ruslan Kudrin

Age 40

  • Three times annual salary (3x) saved for retirement; saving at least 15% of gross income
  • College savings established for children, if applicable
  • Increased investing expertise and diversification of investment portfolio assets
  • Increased human capital (i.e., job skills and knowledge) to remain employable and earn promotions/raises

Age 50

Photospin/MonkeyBusiness Images
  • Six times annual salary (6x) saved for retirement; making catch-up retirement savings plan contributions
  • Increased knowledge about the specifics of Social Security, Medicare, and employer retirement benefits
  • Increased knowledge of aging parents’ finances and communication about caregiving-related issues
  • Use of financial advisers, as needed, as net worth increases and finances become more complex

Age 60

  • Eight times annual salary (8x) saved for retirement
    Photospin/Scott Griessel/Creatista
  • Paid off mortgage, home equity loan, and credit card debt prior to retirement
  • Catch-up retirement strategies used, if needed (e.g., downsizing, moving, working longer, and selling assets)
  • Learning new skills and/or making other preparations to transition to a “second act” job or volunteer role 

To learn more about age-based financial planning milestones from age 0-10 through 90-100, read “Money Milestones for Each Decade” (Reuters).

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