How to Stay on Track Financially at Every Age

Buying a life insurance policy is a great step to help protect your loved ones’ financial security. When you’re juggling multiple financial priorities, it can get confusing to tell whether you’re on track in all the areas that matter to you.

Every age and life stage comes with its own priorities and financial benchmarks. These tips can help you keep finances on track, so you feel prepared to care for what’s most important to you.

In Your 20s: Build Healthy Habits 

Your 20s can be an exciting time to explore different paths and start determining what (and possibly who) is most important in your adult life. It’s also a great time to consider a life insurance policy, since premiums are lowest when you’re young. 

Getting other healthy habits in place as soon as possible means that you (and your loved ones) are likely to be in a better financial position by the time your life insurance policy ends.

Retirement

Start saving for retirement as soon as your work enables you to do so, and work on increasing toward a 15 percent goal. You’re aiming for the equivalent of your salary in a retirement fund by your 30th birthday.

Home

You may or may not be a homeowner yet, and a tough housing market can make it challenging to buy a house now. Whether or not you own your home, think seriously about where you’d like to live long-term and what you can afford for a house down payment and mortgage.

Kids

Lots of people turn to life insurance because they have a baby or are planning to grow their family. Besides life insurance, you need to make financial and legal preparations like writing or updating your will, planning your new baby budget, and looking into a 529 account or UGMA to save for your child’s future.

In Your 30s: Meeting Milestones

While you might still explore new directions for your life (planned or not), your 30s may be a time to transition from plans to actuality. Finding a job you love, welcoming a baby or buying a house can all add new shape and meaning to the life you’re building—and new reasons to have financial protection in place for your loved ones. Here are ways to get your finances in strong shape.

Retirement

Hopefully, you kicked off your 30s with the equivalent of your salary in a retirement account. Experts at Fidelity recommend tripling that by age 40. Behind on retirement? Don’t worry, you still have a long career and lots of time for saving ahead of you. Other rules of thumb include aiming for about 1.5 times your salary by 35, and up to 2.5 times by 40.

Home

The typical first-time home buyer is 36, a record high, so if you’re still browsing real estate listings in your mid-30s, you’re in good company. If you’ve purchased a home, you want to make sure your life insurance coverage is enough to pay your outstanding mortgage balance, so your family wouldn’t have to sell a home they love if they lost you.

Kids

This is likely to be the decade that you decide how many kids you’ll have. Aim to set up savings accounts with regular contributions before your kids reach school age—they’ll have more time for college savings to grow, and you can cross the task off your list before your schedule gets (even more) jam-packed. 

In Your 40s: Changing Family Life

Depending on your family’s timing, you may be keeping up with toddlers, teens or both. As you make memories, grow your career and enjoy family life, make sure your savings are keeping up the pace with your family’s changes. Depending how young you purchased life insurance, you may already be nearing the end of a 20-year policy term. If you already know you want to continue coverage, look into renewing your policy as early as you can to help you secure the best rates.

Retirement

If you’ve been on track with retirement savings, this is the decade where your retirement fund should grow from three to six times your salary. If you’re working to catch up on retirement savings, you should aim for at least triple your gross household income saved for retirement by age 50.

Home

As you grow your career and find rhythms in your home life, keep updating your budget to reflect new plans. Experts recommend saving six to 12 months worth of income in an emergency fund. You might need to revisit that number if it’s been a while and your lifestyle has changed.

Kids

You might start this decade getting one child ready for kindergarten, and find yourself helping another navigate the college application process only a few years later. Even if kids you had in your 20s may be getting ready to leave the nest, your role as a parent is far from over. You’ll probably expect college students to return home for holidays and breaks (or even just to do laundry). Teens can get involved earning some of their own income, and they should be part of the conversation about what kind of colleges you can help pay for and how much debt they’ll take on.

The average cost of college is about $36,000 per year. One expert rule of thumb is to save one-third of expected costs (with the other two-thirds coming from financial aid, loans, and contributions from your income while your child is in college). This can be a good time to meet with a financial advisor and plan what college options are realistic for your family.

In Your 50s: Preparing a New “Nest”

As kids grow and make their way into adulthood, your home life naturally changes. That doesn’t mean your family “nest” is empty, though. About half of parents of children over 18 are helping them make ends meet financially. You might be discussing plans for how to schedule and budget your lifestyle in a “new nest” with your partner, and planning how to make the most of the later stages of your career.

Retirement

The ultimate goal is to have at least 10 times your pre-retirement income saved by the time you leave the office for good (assuming that happens at age 67). In your 50s, that means aiming to grow your retirement accounts to eight times your income. If saving for retirement hasn’t gone according to plan, turning 50 means you’re eligible to make annual catch-up contributions, which can help you feel more prepared for a financially stable retirement.

Home

If you bought your house young, you may be entering the home stretch on your mortgage. If it took longer to find a place you love, you may be making house payments closer to retirement age, or even a few years later. This is a good time to evaluate—do you feel like you have enough saved to cover outstanding mortgage or other debts? Or would your loved ones struggle to manage?

Kids

Many families see children becoming increasingly independent and launching their own adult lives—and possibly even having children of their own. Having fewer dependents is one indication that you could be phasing out of a need for certain types of life insurance. If your kids still rely on you financially, this is a good time to check in on how long you expect that to be the case, and how far your savings can go to cover their needs. You may find you feel well equipped to “self-insure” your family’s needs, or you might realize you could use some additional financial peace of mind for longer.

In Your 60s and Beyond: New Relationships With Money

In many cases, people expect to retire from work sometime in their 60s. If you purchased life insurance as a way to help protect your family’s financial security in your working years, you may be transitioning out of that need. But wise money management is still an important part of your life. Whether you’re primarily covering your own needs or still supporting family members, your relationship with money and the example you set for your family matters.

Retirement

You may be planning to retire in the next several years, or your financial circumstances or interests may lead you to consider extending your career. Talk to a financial advisor about setting a retirement finance plan or evaluating what working options are realistic.

Home

Will you stay in the family home? Downsize? Look into different living arrangements? Do you have plans in case you need long-term medical care or assisted living? Your most comfortable living arrangements may shift in years and decades to come. Consider your preferences and budget to plan what might feel right for you.

Kids

Depending on your family, you might be getting involved in helping guide and support the next generation! From providing childcare to contributing to tuition, many grandparents offer meaningful help as their kids raise their own families. If this is you, a financial advisor may be able to help you balance your goals to support family members and enjoy your own life.

Your relationship with loved ones (and money) changes over the years, but never ends. By staying proactive and building clear plans, you can make the most of your time and resources to reach goals and create a life you’re proud of.

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