A Lifetime of Value:
Financial Planning at Every Stage
Written By: Ryan Rink, CFP®, EA, ChFC®, CLTC®
Financial planning is an ever-changing, lifelong process. The priorities that matter most in your 20s look very different from the ones that matter in your 60s. That being said, it’s important to create a financial plan that you revisit, adjust, and build on year after year. Here is a look at how financial priorities tend to shift across a lifetime, and what’s worth paying attention to at each stage.
Early Years (20s-30s)
This stage is about establishing habits that compound for decades. In your 20s, time is your biggest advantage. Each dollar saved now has decades to grow. A reasonable target is to save around 10% of gross income, with 15% as a stretch goal. Because income tends to be lower early on, leaning into Roth retirement accounts (Roth 401(k), Roth IRA) often makes sense. You pay taxes now, but qualified withdrawals in retirement are tax-free. A target-date retirement fund can also simplify the “what do I invest in” question while you’re still learning the ropes.
By your 30s, the focus shifts to fine-tuning your savings. Your income should be increasing at this point, so try to push savings to 15-20% of income. Most importantly, never cash out a retirement account when changing jobs. Rolling those funds into an IRA or a new employer plan keeps decades of progress intact.
Other priorities at this stage include:
- Reviewing student loan repayment options
- Building a working budget
- Understanding group (employer) benefits
- Life and disability insurance planning
- Education fund (529, UTMA) planning
Mid Years (40s-50s)
This is often the busiest financial stretch, with peak earning years colliding with the biggest responsibilities: kids, aging parents, career progression, etc.
In your 40s, it’s worth checking progress against your goals. This is a common point at which people bring in a financial advisor to stress-test the plan and help navigate what is ahead. Watch for ‘lifestyle creep,’ where spending rises in step with income. Committing to save a set percentage of every raise or bonus helps keep this in check.
By your 50s, this becomes a matter of building a real income plan. This includes, but is not limited to, projecting retirement cash flow, taxes and investments. Downsizing once kids are grown can free up equity and lower ongoing costs, while also providing a chance to plan ahead for future health/mobility needs.
Other priorities at this stage include:
- Integrating planning strategies across investments, insurance and taxes
- Evaluating real estate holdings and employee stock options (if applicable)
- Planning for healthcare and eldercare needs in retirement
- Fund retirement catch-up contributions
Late Years (60s-70s+)
This stage is less about building wealth and more about deploying it thoughtfully, funding the life you’ve planned for and thinking about what comes after.
Planning for a long retirement matters more than people expect. The odds are higher than ever that one spouse of a 60-year-old couple will live into their 90s, so it’s worth stress-testing a portfolio against that kind of longevity. Inflation is another important consideration. Being overly conservative with investments can quietly erode purchasing power over a retirement that may last 30+ years.
One of the biggest decisions people make at this stage is when to start drawing Social Security. Benefits typically start as early as 62, but they grow at a guaranteed rate for each year you delay, up until age 70. Reviewing which expenses are essential versus discretionary also makes it easier to adjust if circumstances change.
You’ve worked hard over the years to build a sizeable nest egg, but it can be very difficult to know how to create a tax-efficient withdrawal strategy. That’s where working with Shakespeare can help. The solution to this varies for each person, as everyone’s situation is different.
Other priorities at this stage include:
- Funding passion projects and pursuing a sense of purpose
- Reviewing Medicare, and pre-Medicare health insurance (if applicable)
- Consolidating accounts for simpler management
- Charitable giving
- Wealth transfer planning and a fresh look at tax and estate planning strategies
Items to Revisit Annually
Regardless of age, a few things deserve ongoing attention rather than a one-time check:
- Portfolio allocation, reviewed every year and monitored throughout the year
- Debt management, as necessary.
- Risk tolerance, monitored continuously
- Emergency cash reserves, revisited annually
- Beneficiary designations, reviewed annually
- Estate plan review, updated for any life changes
It’s never too early to start planning for your retirement. The earlier you start, the better. Having a financial professional like Shakespeare can help you navigate through these challenging topics and help increase your likelihood of success.