Get into the habit of saving as early as possible. Your 20s is a great decade to learn about investing, to enroll in your company’s benefit plan (and contribute at least enough to get any company match!), to open up a savings account, and to open a personal retirement account like an IRA. Also, start working to pay down your debt. You may have taken out loans for your education, or to buy a car, and you may have racked up some credit card debt too. Even though your 20s is pretty young, paying down your debt should be a goal you start working on as early as possible.
Your 30s are a great age to ramp up investing in your retirement. Hopefully you’ll be in a better financial situation than you were in your 20s and so you can start saving more money. Increase the amount you invest and contribute to your 401(k) and IRA. Shoot for contributing 10% of your paycheck.
In your 40s, look into ways you can increase your retirement savings. There may be ways to save more that you don’t know about, so ask around. Consider hiring a financial planning professional if you are concerned that you are not on the right track.
When you turn 50 you are eligible for IRA catch-up contributions. This means that you are able to contribute more money to your IRA than you were before, to help you save for retirement. Make sure to take advantage of this if you can. Also, think about what insurance you might need in the future. Look into long-term care insurance. Generally, the younger you are when you enroll, the lower the premium will be.
During your 60s, finalize your retirement strategy. Make sure you understand what your Social Security benefit will be at various ages and factor this into your decision on when to retire. If you cannot afford to retire, consider your options for continuing to work, even if on a reduced schedule. Remember, if you hold off on retiring, the higher your Social Security benefit will be when you do retire. And don’t forget to apply for Medicare three months before you turn 65.
Once you turn 70, your Social Security benefit can no longer increase, so start collecting it if you haven’t already. Also, if you have a traditional IRA that you have not taken withdrawals from yet, you must start taking money out after age 70 and a half. Otherwise, you may get hit with a big tax penalty. Required minimum distributions may also be required for other defined contribution plans like 401(k) plans. This is also the time to evaluate whether your income needs are being met. If they are not, you should review your options and try and find ways to reduce your living expenses.
All of this information and more can be found on WISER’s checklist, Financial To-Dos for the Decades. This is great resource for yourself and for your friends and family in any stage of life.
Keep in mind, it is important to know what to focus on now so that when you retire you are financially secure and can enjoy the decades to come!