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Financial Planning Milestones for Different Ages

January 2018

Barbara O’Neill, Ph.D., CFP® Extension Specialist in Financial Resource Management Rutgers Cooperative Extension

Similar to a medical standards of care (e.g., having a colonoscopy starting at age 50 and regular blood pressure and bone density tests), certain age-based milestones tell people key actions to take at different ages.

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

20s and 30s- Debt repayment and household formation

40s and 50s- Peak earnings and wealth accumulation

60s- Preparation for retirement and retirement

70s and Above- Transitions and wealth distribution

Especially during later life, there are many age-related financial milestones. For example, at age 59 ½, people are eligible to make withdrawals from a traditional IRA or tax-deferred employer retirement savings plan without paying a 10% penalty and, at age 65, they are eligible to claim Medicare benefits. Like medical milestones, which are generally determined by scientific research (e.g., clinical trials), financial milestones are grounded in research and facts, typically tax laws and other government policies.

Want to improve your personal finances? Search the words “Financial Milestones for Adults” online and find articles that describe the age-related financial milestones that apply to you. Although actual timing will vary from person to person, 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.

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

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

  • 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
  • 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).