Financial Milestones: Decade by Decade

Your 20s are about building habits and foundations that will compound for decades. Key milestones: • Build a 1-month emergency fund (starter) • Pay off high-interest debt • Start contributing to retirement (even small amounts) • Establish good credit • Create and follow a basic budget Why these matter: Starting retirement savings at 22 vs. 32 can mean hundreds of thousands more at retirement, thanks to compound interest. Good credit established now gives you decades of better rates on everything. Practical strategies: • Automate savings – even 50/month adds up • Use the 50/30/20 rule: 50% needs, 30% wants, 20% savings/debt • Avoid lifestyle inflation – save raises instead of spending them • Build skills that increase earning potential • If employer offers retirement matching, contribute at least enough to get the full match Common mistakes to avoid: • Ignoring retirement because it's "far away" • Accumulating credit card debt for lifestyle • Not tracking spending at all • Letting student loans languish without a payoff plan

Your 30s often bring higher income but also higher expenses – family, housing, career demands. The key is balancing increased responsibilities with accelerated wealth building. Key milestones: • Grow emergency fund to 3-6 months expenses • Be on track to save 15% of income for retirement • Eliminate all non-mortgage debt • Own adequate insurance (life, disability) • Start saving for major goals (home, education) Why these matter: This decade is often your highest earning-growth period. Money saved and invested now has 30+ years to compound. Insurance protects the family you may have started. Practical strategies: • Max out tax-advantaged retirement accounts • Start or increase automatic contributions annually • Get term life insurance if you have dependents • Consider disability insurance (protects your income) • If buying a home, aim for 20% down to avoid extra costs Common mistakes to avoid: • Overextending on housing (house-poor) • Neglecting retirement to fund lifestyle • Not having adequate insurance • Ignoring estate planning basics (will, beneficiaries) • Keeping up with peers financially

Your 40s often represent peak earning years. If you're behind on financial goals, this is the time to catch up. If you're on track, it's time to accelerate. Key milestones: • Have 3x your annual salary saved for retirement • Emergency fund fully funded (6 months) • College savings on track if applicable • Mortgage payoff plan in place • Estate planning documents completed Why these matter: You still have 20-25 years until traditional retirement – enough time to significantly grow wealth. Your responsibilities (children, aging parents) may be at their peak. Practical strategies: • Maximize all retirement contributions • Consider catch-up contributions if behind • Review and optimize investment allocation • Pay extra on mortgage if retirement savings are on track • Have serious estate planning conversations Key questions to ask: • Am I on track for when I want to retire? • Do I have adequate life and disability insurance? • Is my investment allocation appropriate for my timeline? • Have I updated beneficiaries on all accounts? Common mistakes to avoid: • Prioritizing children's education over retirement • Taking on too much risk trying to catch up • Ignoring healthcare planning • Not adjusting insurance as circumstances change

Your 50s are about fine-tuning your retirement plan and making final preparations. The finish line is visible. Key milestones: • Have 6x your annual salary saved for retirement • Clear vision of retirement lifestyle and costs • Catch-up contributions maximized • Healthcare strategy for retirement • Debt-free (ideally including mortgage) Why these matter: You're likely in your highest earning years. Catch-up contribution limits let you save significantly more in retirement accounts. Healthcare costs become a major planning factor. Practical strategies: • Use maximum catch-up contributions • Create detailed retirement budget • Research healthcare options (private insurance, national plans) • Consider downsizing if home is too large • Start visualizing how you'll spend time in retirement Critical planning: • Calculate your retirement number • Project income sources (pensions, investments, government benefits) • Plan for healthcare costs between early retirement and eligibility for senior benefits • Consider long-term care insurance Common mistakes to avoid: • Underestimating healthcare costs • Not having a plan for how to spend time • Helping adult children at the expense of your retirement • Being too conservative or too aggressive with investments

The 60s are about transitioning from accumulation to distribution – living off what you've built. Key milestones: • Have 8-10x your annual salary saved for retirement • Clear income strategy (which accounts to tap, in what order) • Social security/pension claiming strategy • Estate plan fully updated • Healthcare coverage secured Why these matter: How you withdraw matters as much as how much you have. Smart ordering of withdrawals can significantly extend your money. Healthcare is often the largest retirement expense. Practical strategies: • Delay social security/government benefits if possible (larger payments) • Consider part-time work for income, purpose, and social connection • Use the 4% rule as a starting point for withdrawals • Keep 1-2 years of expenses in cash for market downturns • Stay engaged – retirement is about living, not just not working Withdrawal order (general): 1. Taxable accounts first (allows tax-advantaged to grow) 2. Tax-deferred accounts (required minimums) 3. Tax-free accounts last (maximize tax-free growth) Common mistakes to avoid: • Spending too much early in retirement • Being too afraid to spend (dying with too much) • Not adjusting for inflation • Neglecting required minimum distributions • Social isolation

Some financial milestones matter regardless of your decade. Emergency fund: • Starter: $500-1,000 • Basic: 1 month expenses • Solid: 3 months expenses • Secure: 6+ months expenses Debt payoff priority: 1. High-interest debt (credit cards) 2. Car loans and personal loans 3. Student loans 4. Mortgage (optional – often lowest rate) Insurance basics: • Health insurance: Always • Car/home insurance: When applicable • Life insurance: When others depend on your income • Disability: While working (most overlooked) • Long-term care: Consider in your 50s Retirement savings benchmarks: Age 30: 1x salary Age 40: 3x salary Age 50: 6x salary Age 60: 8x salary Age 67: 10x salary Net worth milestones: First $1,000 saved First $10,000 net worth First $100,000 (hardest milestone) Positive net worth First million (easier than first $100K once you get there)

Many people feel behind on financial milestones. Here's how to catch up. In your 30s: • You still have 30+ years – time is on your side • Focus on eliminating debt aggressively • Increase savings rate with every raise • Don't panic – steady progress wins In your 40s: • Still have 20-25 years – plenty of time • Maximize retirement contributions • Consider side income • Cut expenses strategically • Avoid high-risk "catch up" schemes In your 50s: • Use catch-up contribution limits • Consider working a few extra years • Reduce lifestyle expenses now • Delay social security/pension claims • Downsize housing if needed In your 60s: • Part-time work can bridge gaps • Delay benefits for higher payments • Consider relocating to lower cost area • Be realistic about lifestyle adjustments • Remember: You likely need less than you think Universal catch-up strategies: • Increase income (skills, side work, promotions) • Decrease expenses (be honest about needs vs. wants) • Automate everything to remove emotion • Get professional advice if needed • Focus on progress, not perfection