Adulting Through the Decades

In February, our family celebrates six birthdays between the ten adults in our family, spanning 4 decades. So with that on my mind, I created these financial to-do lists organized by the decade to help build your financial future, no matter which decade you're in.

20’s - Your First “Real” Job

In your 20’s, you’re either fresh out of college or have finally settled on a job in a career path you want to follow. When you land that first real job, here are 4 things you should do.

Build Emergency Fund

Most importantly save up an emergency fund. It doesn’t have to be much, but enough that when you need to see the doctor or need a new set of tires you don’t have to borrow on your credit card to do it. Eventually this should be at least 3 months' worth of expenses, but $1,000 is a great starting place.

Start Retirement Savings

You should start by putting money away in your 401(k). If possible, put in at least enough to take advantage of your employer’s matching, but at least start with something.

Use Employee Benefits

Also study your employment benefits package carefully to see if there are other things you should be taking advantage of. I once had health insurance through my employer that paid for two massages each year, something I learned about from a coworker a few years into the job.

To Buy or Rent?

Consider whether or not you want to purchase a house. Home ownership isn’t for everyone, especially when you haven’t decided if you want to put down roots where you are. If it looks like you’ll be in the area for at least 3 years, you can consider buying a home, but it’s almost always better to own a home as long as possible.

Here are a few things people don’t realize about homeownership. 1) You have to maintain your home, and if it wasn’t in good condition to begin with this can be really expensive, but not maintaining your home is a LOT more expensive in the long run. 2) It costs money to borrow money (origination fees, points, interest, etc.); it costs money to prove that you own the home (I still don’t understand why title companies charge so much for looking up public records); it costs money to sell a home (usually the seller pays the commission for both the buyer's and seller’s agents); it costs money to refinance a home. Basically anything you do with a home costs money. So if you’re planning to purchase a home and then sell it quickly, your home’s value will need to increase by at least 8 – 10% just to break even.


If you become a parent, now is a good time to look at life insurance and make sure you have your basic estate planning done. I generally recommend term life insurance that will cover paying off your mortgage, putting your kid(s) through college, and anywhere from 1 – 5 years of expenses for your surviving spouse.

If they are working you can go toward the lower end, but if they aren’t currently working they may need time to retrain or find the right job. This isn’t true for everyone, but it’s a good starting point. The term can usually end the year your kids should graduate from college because by then your mortgage will be paid down substantially (I hope), college should be paid off (right?), and you’ll have been building up a nest egg that will help your surviving spouse get by.

30’s - Starting to “Adult”

By now, your responsibilities both at work and at home are likely growing.

Retirement Savings Checkpoint

If you haven’t already set a retirement savings goal, aim to save one year’s salary across your retirement accounts. If that sounds like a lot, remember that unlike previous generations, we will both live longer and have little or no pension money to support us during retirement. So for most people under 60, their 401(k) and Social Security is all there ever will be to pay for retirement. So start saving now.

Human Capital

Now’s a good time to talk to your boss about a raise. Research shows that your 30’s and 40’s are when you receive most of your raises. Once you receive that raise, save half of it, every time. Why? First, it boosts your savings significantly. Save some in Roth accounts, some in traditional retirement accounts, and some in taxable accounts. This is called tax diversification, and gives you options when the tax code changes again in the future. Second, it keeps your standard of living more reasonable so that when you are ready to retire you don’t need less savings to retire on. This means that you can retire earlier than someone who has the same retirement savings as you but who is spending more than you are.

Estate Planning

You should also review your estate planning. I know this sounds boring and even difficult, but read through your will and make sure it still reflects your wishes, especially who will be guardian of your children. Minor changes can be made with a codicil, but major changes should be made with a new will which will start off saying any prior wills are null and void. Make sure you keep a copy of your will in a safe place, and that someone other than your spouse knows where to find it. You can also start building an estate binder which would contain your wills, any trust documents, last wishes, letters to loved ones, passwords for online accounts, combinations to safes, location of safe deposit keys, a family tree, and anything else that you would want if you were the executor of an estate.

Who’s Your Beneficiary?

Check your beneficiary designations and look at how your accounts are titled. If you have an account with someone else that is Joint Tenancy with Rights of Survivorship (JTROS) then that person gets the entire account when you die. If you instead own property with someone else Tenancy in Common (TIC) then the joint owner does not automatically get your part of the property when you die. Make sure the accounts’ designations still meet your desires.

College Funding

Be saving for your kids’ college, if that is a goal that you have. At this point the main goal is to get some savings invested and give it time to grow. 529s are a great vehicle for this, but make sure you don’t take too much away from other goals to save for this one.

40’s - Mid-life already?

DON’T PANIC! You may have reached mid-life, but you don’t have to have a crisis. When you feel the urge to spend a huge amount of money on that car or boat or vacation home, pause and carefully assess your financial situation. It’s possible you can afford to treat yourself to an expensive purchase. But keep in mind not only your current financial obligations but ones just on the horizon.

Debt Management

Statistics show that Americans tend to max out their debt in their 40’s. Between helping aging parents, paying for college educations, buying cars, and still having a mortgage, borrowing equity out of the home or maxing your credit cards can be tempting, but remember this too shall pass. Aim to live off your take home pay (meaning after taxes and after savings).

Human Capital

Advocate for yourself and go after additional raises at work. Most of your large raises come in your 30’s and 40’s. You’re unlikely to receive large raises in your 50’s, mostly just cost of living raises. If you can get large raises in your 40’s you set a higher baseline for those adjustments in your 50’s.

College Funding

Make sure that you’re saving adequately for whatever type of schooling you want for your children. Adjust your savings if you need to. It’s better to over-save a little, but not if all of that money is going to be taxable if you take it out for anything other than college.

Tax Diversification

Some of your savings should be going into a taxable brokerage account if it isn’t already. This gives you more flexibility when you have need to start taking money out of your investments.

Who’s Your Beneficiary?

Go through and once again read your will and look at your beneficiary designations. You’d be surprised how often I have found a person’s parents listed as their beneficiary on an account because it was set up before they were married.

Get Professional Help

If you haven’t already, start looking for a financial advisor. Now is the time when you have the most opportunity to get your financial life in order and make sure that you will meet all of your financial goals.

50’s - Max Earning Potential

In this decade, you will likely reach your maximum earnings potential. Large raises will be fewer and farther between, if they come at all. Plus, many people become empty nesters in their 50’s, which presents even more opportunities to spend money on your dreams, like travel, vacation homes, etc….


Before spending everything you earn, know that wherever your income is now, is likely where it will stay until retirement. So make sure you can live within your means (unless you change careers, receive a large promotion, or obtain your first advanced degree).

Maximize Retirement Savings

Consider putting as much as you can into retirement savings (the amount you can contribute increases when you turn 50) and that you are saving outside of your retirement accounts. If all of your savings are in a traditional 401(k), you’ll get a nasty surprise when you turn 70.5 and the IRS wants their cut of your Required Minimum Distributions (RMDs).

Debt Reduction

If you haven’t already, start making a concerted effort to pay off your mortgage and any other debts. Once you pay off your mortgage, your housing costs go down significantly, making it easier to save for retirement because you have the money freed up to save more and because you’ve reduced your retirement expenses.

60’s - Retirement?

Retirement is not for everyone, but most Americans have a stated retirement age goal of 62 to 65.

Hire a Professional

If that’s you then you should definitely be visiting with a Certified Financial Planner (CFP®) to make sure that your finances are in order BEFORE you hand in that letter of resignation that you wrote out a few decades earlier. It’s far better to realize you need to work a few extra years when you still have a job.

Increase Savings/Decrease Spending

While you are still working, max out your savings. If you plan to reduce your lifestyle in retirement, try adjusting your lifestyle now and see how you do. It’s better to try cutting expenses while you still have an income than after you retire. That way if you fail, you can adjust and try again without having done major harm to your savings.

Tax Planning

After retiring and before you start your Required Minimum Distributions and Social Security benefits, you have a unique opportunity to decide your own income. Usually it’s to your advantage to withdraw from your Traditional 401(k) or IRA and recognize income while your other income sources are low so that you can reduce your future tax liability. This money can either be converted to Roth accounts or put into taxable brokerage accounts. Talk to your CPA and your financial advisor about this strategy and ask if a Roth or a brokerage account makes more sense for your situation.

Maximize Your Social Security

Talk to your financial planner about your Social Security strategy. For many people, delaying Social Security benefits as long as possible will pay off in the long run. But your circumstances have a large impact on what an optimal strategy will be. While for many this will not make or break your retirement, it can have a sizeable impact, especially when you look at the difference of receiving Social Security at 62 versus delaying until 70. (If your Full Retirement Age benefit was $2,000 / month, $24,000 / year and you were born after 1960 your benefit at age 62 would be $1,400 / month, $16,800 / year. If you delayed until age 70 your benefit would be $2,480 / month, $29,760 / year.) Remember not to start you Social Security benefits while you’re working if you aren’t Full Retirement Age yet as this will reduce your benefits significantly. And don’t forget spousal benefits! If you were born on or before January 1, 1954 ask your financial advisor about Restricted Filing. Don’t delay your Social Security past age 70, there is no benefit after age 70 and if you don’t claim it will just be lost money.

Make Your Medicare Decisions

Enroll in Medicare when you turn 65. You have a 7-month window around your 65th birthday to enroll in Medicare Part B, if you miss that you may have to pay a late enrollment penalty to add Part B later. Talk directly to the Medicare office about your enrollment, they are incredibly knowledgeable and helpful, but there are several companies out there trying to “help” you sign up for Medicare, it isn’t difficult, but watch out for scams.

If you still need help, talk to your CFP® and they will help you (although they should have already been talking to you about this before you turned 65, so you may need to find a better financial planner). Most people need Part A (inpatient hospital treatment) and Part B (more like traditional health insurance), and Part D (prescription drug coverage) can be very helpful as you start building up your prescription regimen. Part C (private company “Medicare Advantage”) plans can help cover specific needs that you have that are not covered as well by Medicare.

Estate Planning

Once again, review your estate plan and account beneficiaries. Most retirees don’t need life insurance, but you will have people try to sell it to you. Whenever they do attempt to sell you life insurance, ask how much they will make in commission; this will usually tell you why they want you to buy insurance.

Getting Started

This is not a definitive list, and it does not apply to everyone. Even as short as this list is, it can be daunting when it’s your life and you’re facing seemingly insurmountable obstacles. Just remember, regardless of your current financial situation, make sure you are taking steps to reach your financial goals.