Saving for a fruitful retirement

We have developed the ultimate financial planning guide for your 20s, 30s, 40s, 50s, 60s, as well as 70s and beyond. As you get older, your financial needs change, as you may have to save enough to send children to college or open an emergency bank account for unforeseen medical problems.

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With this guide, you will know exactly what to do with your money, depending on where you are in life, as you aim for a comfortable and secure retirement. This includes best practices for saving, spending, investing and planning for major life changes and events. Let’s get started!

Your 20s

Your first taste of freedom truly comes in your 20s, as you’re no longer living at home and now you have to provide for yourself. One of the key hallmarks of your first real decade as an adult is starting a career, which isn’t an easy thing to do but it’s the first step towards your financial planning strategy.

budgeting for young adults

We have amassed the best ways to plan your finances well throughout your 20s, a time during which you will learn the best budgeting practices and get a head start on your financial future. This is the time to set yourself up for success.

Begin saving right away

You are never too young to start saving, and your 20s are especially important because it’s the perfect time to develop smart budgeting habits. Don’t be afraid to be thrifty and live in a small apartment if need be, as you’re only starting out at this point. If possible, start saving about 10% to 15% of your pre-tax income.

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The amount may sound like a lot, but this percentage remains about the same throughout the rest of your life, so it’s a good habit to get into. Think of this as a tax on your income that will ultimately be paid back to you (plus interest!).

Begin saving right away (continued)

Because of the way interest accumulates, if you don’t start saving that amount throughout your 20s, and instead start saving in your 40s, you will have to save 40% of your pre-tax income. This a big chunk of money to save and can really put a stranglehold on your financial situation.


Another great thing about starting early is just how much your savings can snowball. For example, if you invest $100 per month with a 6% return starting when you’re 18, you can get $307,000 by age 65. Be wise and let your money do the work for you.

Create a debt repayment plan

The vast majority of us are burdened by the stress of debt — whether it be student loans or credit card debt. The worst thing you can do is allow your debt to linger, as interest will continue to compound, digging you into a deeper financial hole than you were before. Plus, failing to pay close attention to your debt can lower your credit score, hurting your ability to buy a house or get a loan.

how to pay off debt

One way to address your student loans is by doing some research on strategies to help you with repayment. This can include getting involved with the Peace Corps or another organization that helps to reduce the magnitude of your debt in exchange for your service. You can also set up automatic payments for your student federal loans, which will reduce 0.25% off your interest rate.

Create a debt repayment plan (continued)

There are some great plans out there for those with federal loans, including the Pay As You Earn (PAYE) option. In some cases, this plan allows you to pay only 10% of your discretionary income every month for 20 years. After you reach the 20-year mark, the rest of your student loans are forgiven.

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In my case, I would’ve had to shell out more than $500 a month without the plan, but instead ended up only paying $50 a month on my first year with the PAYE plan. Just make sure you stay on top of your payments as late payments can cause your agreement with the government to be voided.

Stay on top of your credit score

Paying your credit cards and debt on a regular basis is not enough to ensure you have a strong credit score, as there may be an old bill that you’ve forgotten about which could be dragging down your credit score. Credit scores are key, as they have a say in whether or not you can buy or even rent a home.

how to save for retirement early

Legally, you should be able to receive a free copy of your credit report every year from each of the three major credit bureaus: TransUnion, Equifax, and Experian. A good way of staying on top of your financials is by getting a report from one of these bureaus every four months, so you get three reports at different times of the year.

Stay on top of your credit score (continued)

The average credit score for millennials is currently 625, which is well below the national average of 667 and it is the lowest of any generation, according to Experian. Set yourself apart of from your peers and actively work to improve your credit by paying bills on time, keeping balances low on credit cards and paying off debt.

how to raise credit score

Make sure you don’t snooze on your score early on and compromise your future. You can get your credit reports for free through By tracking your credit score, you can make small financial changes that can have a big impact. In this case, knowledge really is power.

Your 30s

Many consider their 30s to be the most crucial decade of their lives, as a lot of big decisions have to be made, such as whether or not you want a family or a career change. These lifestyle choices have a major impact on how you will set up your financial plan.

budgeting in your 30's

Quandaries such as this one can really alter the path of your financial future. You will need to develop an even tighter budget if you plan to grow your family in the future. Financial planning is all about making choices that will allow your life to continue to flourish.

Focus on income percentage saved

One of the biggest mistakes that people in their 30s make is continuing to save the same amount, even as their income increases. Reaching a higher income bracket means that you’ll be paying more taxes, which will require you to save more money than before. You should continue following the rule of saving 15% to 20% of your income regardless of what it is, or even more if you can afford it.

how much to save for emergency fund

Live well below your means as life starts moving at a faster pace throughout your 30s, which will require you to have some foresight as to what you’d like to invest in moving forward. If you don’t follow this rule, it’s going to be hard to help get your child through college or buy that new family house you’ve had your eye on.

Upgrade your insurance coverage

There are no guarantees in this life, but having insurance on your assets can keep you covered if something goes awry. That may sound like a corny insurance ad but that gecko got something right  — investing in renters, home, and auto insurance are necessary when you are strategizing your family’s future.

Insurance coverage
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Even if you had insurance throughout your 20s, you should consider adjusting your insurance coverage as the value of your assets increases with time. This will allow your belongings to be covered no matter what arises and, in reality, the increased cost of coverage is well worth it.

Upgrade your insurance coverage (continued)

Even life insurance is a worthwhile investment, in case something happens to you, as it will give your family a financial cushion to get through tough times. If you don’t have a spouse or dependents, obtaining a life insurance policy can still be a wise move if you have a mortgage. That way, your family is not left scrambling to make payments.

what kind of insurance do i need

There are plenty of websites out there to help you compare insurance rates, including for auto insurance, and Accuquote for life insurance. Having a safety net for your assets is essential in your 30s and the only way to get an A+ in adulting.

Max out your 401(k) and/or IRA

In a perfect world, we’d all have a 401(k) or IRA that we’re maxing out every month throughout our 20s. However, life gets in the way and unforeseen bills sometimes pile up. If you weren’t able to contribute to your retirement account, you should definitely start doing so by your 30s and you should be maxing out your account.

different retirement plans

With an employer-sponsored plan, you should contribute as much as you can as your company will match that amount every year. With a 401(k), you can invest up to $18,500 a year in your account. If your company does not offer a 401(k), you can open a traditional IRA or a Roth IRA and max it out if you can, as you’ll be able to invest up to $5,500 a year or 25% of your compensation, whichever is lower.

Your 40s

So, you have already established a sense of financial security in your 40s? Fantastic! Even though you are off to a great start, you should continue applying these practices throughout your middle age to reach your financial goals and create more freedom as you age. Why stop when you are on a good streak?

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There is no such thing as having too much financial security. Keep making the wise financial decisions that got you here — continue to save, invest, and don’t overspend. At this point, you may have children or aging parents to think about as you plan for your future.

Create an emergency fund

Technically, you should already have an emergency fund established by now, but we don’t blame you if you haven’t as life is full of expenses in your 20s and 30s. Your career may be going well at this point, but businesses downsize at all times and getting laid off is not out of the question.

how to start an emergency fund

In order to survive the dry season, create an emergency fund that can support your family’s finances for at least a quarter of the year. An emergency fund should cover all essential expenses for anywhere from three months to nine months.

Create an emergency fund (continued)

A good way of determining what your emergency fund should look like is by calculating your monthly expenses, dividing this amount by half, and multiplying it by the number of months you’d like to save up for. The next step is figuring out how to save this amount.

how much to put in emergency fund

If you’re already living frugally, you may have to save more than just half of what you spend. If you don’t, you can get by with at least half of your monthly expenses by cutting down on entertainment, family outings, and other luxuries that you can’t afford for the time being. Emergency funds can also help to pay for medical or dental emergencies.

Balance saving for college and retirement

Your children may be getting closer to leaving the nest throughout your 40s, but that doesn’t mean that you should stop saving for retirement. Develop a budget that balances how much you save for retirement versus how much you’re saving for your children’s future. It may be tempting to invest every extra penny in your child’s future, but the fact remains that they can take out loans for college, which is something you can’t do for retirement.

saving for college

If you don’t continue maxing out your 401(k), IRA, and/or Roth IRA accounts, you may have to spend additional years in the workforce. On the other hand, if you feel comfortable about how much you’ve saved for your retirement, helping your children out with their college expenses will prepare them for a future with an easier financial road.

Spend the rest on cutting debt

Once you do reach retirement, you’ll want to be absolutely debt-free. If you’re unable to max out your retirement accounts and invest greatly on your child’s college funds, do what you can and focus on paying off your debt as well. Credit card debt, student loans, and medical bills all accrue interest when left unpaid, so make sure you’re lowering these debts as much as you can.

how to reduce debt

You should also check the interest rates on your credit cards and student loans to determine whether or not you can find lower rates. Conventional wisdom suggests that you should be using one-third of your monthly savings towards reducing your debt, while the rest should be used for your future and your children’s future.

Your 50s

Once you reach your 50s, your main goal in life is to get to retirement with enough money saved up to enjoy your remaining years. You may be a seasoned veteran in your industry at this point, which means that your earnings will likely be higher than they were in previous decades.

financial planning for seniors

Nevertheless, you should still be smart about your spending if you are hoping to have an enjoyable retirement. Don’t be afraid to start planning what you want your retirement to look like. Will you move somewhere tropical? Do you intend to travel? Will you be caring for grandkids? All of these questions will determine how much you save.

Determine what you want retirement to look like

One of the biggest mistakes that people make when saving for retirement is not making goals. It’s important to ask yourself what you want retirement to looks like. If you’re in a relationship, you should also be having a conversation with your loved one to see if your retirement goals line up with each other.

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Do you want to travel late in life or do you want to spend the rest of your years lounging on a beach in Costa Rica? Asking these questions will help you determine how much more you need to invest in your retirement accounts to fulfill these goals. NerdWallet estimates that you need $1.73 million to retire comfortably today, although this figure will be closer to $2 million when adjusting for inflation 15 years from now.

Ramp up retirement savings

Up until your 50th birthday, the maximum amount of money you can contribute to your 401(k) and IRA accounts stays consistent. And, of course, we know you have been making the maximum contributions to ensure a fruitful retirement. BUT, if you haven’t there is still hope to ramp up your retirement savings.

retirement 401K

After your 50th birthday, the maximum contribution figure changes and you can contribute an additional $6,000 in “catch-up” contributions to your 401(k) if you fell behind in the past. This means that you can invest up to $24,500 towards your 401(k). This should put you on the right track!

Ramp up retirement savings (continued)

With an IRA, you will be able to invest an additional $1,000 every year towards your retirement, which raises your total contribution limit to $6,500. This applies to both traditional and Roth IRAs. You can even set up one of each.

Retirement savings

If you do face an emergency throughout your 50s that you can’t cover, you can withdraw money from your 401(k) without the usual 10% penalty if you’re between the ages of 55 and 59 and a half. This move only applies to workers who have been fired or laid off from their jobs and need the extra money, but hopefully, you won’t have to do this.

Examine your Social Security situation

In order to qualify for a Social Security retirement benefit, you will need at least 40 credits, which means 10 years of work for most. Your Social Security benefit will be determined by the 35 years in which you amassed your highest earnings. For those born after 1960, you don’t fully qualify for benefits until age 67, although you can push back your retirement age until age 70 to get a bigger piece of the pie.

social security benefits

Chances are you’re about 15 years away from retiring and reaping the fruits of your labor, so make sure you examine what your Social Security benefits will look like in the agency’s official website. Learning more about where you stand in terms of Social Security benefits can help you determine when you will retire.

Your 60s

Your golden years are here and you’re a stone throw’s away from retirement, so what is there to do at this juncture? Believe it or not, the financial decisions you make in your 60s can have a major impact on what your retirement looks like, as there are several smart moves you can make to improve your finances.

social security benefits

This is also a time for you to start paying attention to your health, as chances are your treatment costs will begin to increase. A good way to save extra money throughout your 60s is by consolidating your retirement accounts.

Consolidate your retirement accounts

If you’re in the twilight years of your career, chances are you’ve worked for multiple companies and therefore have several 401(k) accounts. Thankfully, you can work with an investment firm to consolidate your retirement accounts in order to have every single one of them in the same place, which makes them easier to manage.

how to use retirement money

More importantly, consolidating your retirement accounts will reduce your fees. Having an IRA costs you every year as a custodian has to report contributions and withdrawals to the IRS every year. Consolidating your accounts allows you to curtail these fees, lower your taxes, manage all your finances from the same place, and reduce the amount of paperwork you have to deal with.

Plan for healthcare costs

There are many senior citizens who are in good health well into their 60s, 70s, and even 80s, but at some point, you will need some health care assistance to get the most out of your golden years. The first way to plan for your upcoming healthcare costs is by getting a good insurance plan that covers everything from routine blood work to surgery.

budgeting for health

While it may not be something we want to talk about, many of us will reach a point in our lives where we won’t be able to take care of ourselves. If we don’t have children or if our children no longer live near us, we will need to cover the costs of our day-to-day care.

Plan for healthcare costs (continued)

This means that you will have to save up for a room at an assisted living facility or hire a live-in nurse to help you get through day-to-day living at some point in your life’s journey. These are definitely expenses you need to plan for as they can be quite costly.

financial planning for a home
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Assisted living is not cheap, as it costs anywhere from $34,200 a year (Georgia) to $80,400 a year (District of Columbia), depending on where you reside. Make sure you plan ahead, so you can afford these expenses especially if you are healthy enough to lead a long life.

Consider downsizing

After you reach a certain age and your children have left the nest, you may no longer have a need for a large home. Consider selling your home and finding a small condo or apartment to live in, as doing so will help you earn extra cash that you can use for your retirement. Home repairs can be quite costly, so selling your home can help you circumvent these costs.

budgeting for everything

If your home holds too much emotional value, consider renting out rooms in order to make money out of your empty rooms. Alternately, local family members could move in with you to reduce costs without having to rent out a room to a stranger. You should also consider selling any other assets that you no longer have a need for, such as additional vehicles or investments.

Consistency is key

Your financial needs may change every decade as you get closer to retirement and take on more responsibilities, but there are some tried and true financial planning habits that should remain consistent throughout your entire life. Don’t be afraid to spend a little here and there on entertainment or family vacations as it’s important to take a load off, but always use sound investment practices.

planning for a budget

Life gets easier over the years if you have a budgeting system that you stick to. It’s essential to remain consistent with your spending and saving if you’re hoping to reach the best retirement experience that money can afford. Carefully planning your spending and taking life one day at a time will help you get to where you want to be, and doing so is easier with a plan than without it.