September 19, 2023

Here are decade-by-decade strategies for saving and investing throughout your career so you can retire comfortably.

In Your 20s – A little Adds Up

As start your career, retirement is far from your mind. But this is when you can be most aggressive with investments since you won’t need your savings for decades.

Another benefit of starting early is compound earnings.  This is when money you’ve earned on money you’ve invested begins generating earnings too. Investing a small percentage of your income can really pile up over time.

Also, financial obligations may be lower in your 20s than when you marry, buy a home or have kids. If your employer offers one, try to save enough to receive the full match.

If your employer doesn’t offer a retirement plan, consider an individual retirement account (IRA) and begin investing for your future.

In Your 30s – Don’t Spend It

If you haven’t started, start your retirement savings now.  Waiting could mean you have to save more of your income later to have enough.

In this decade, you may change jobs or take on obligations like home ownership. It’s tempting but don’t withdrawal your retirement savings except for a true emergency. Cashing out means paying taxes plus a tax penalty for using retirement dollars too soon.

Plus, money you withdrawal no longer benefits from that valuable compound earnings benefit we mentioned above.

In Your 40s – Add 1% Each Year

Both your income and financial demands may be higher now.  Resist the temptation to spend more. 

Make a habit of “adding 1%” to your savings each year. Remember, money saved is money you pay yourself.

This is a good time to check progress. Use a retirement calculator to estimate when you can afford to retire.

If you have kids, college savings may be on your mind.  Remember, you can’t take a loan for retirement.  So put yourself first. A financial coach can help you prioritize. 

In Your 50s and 60s – Plan for Social Security and Be Social 

As you close in on retirement, check your plan and make adjustments as needed.

If you started late, save as much as you can. Beginning at age 50, you can save more through a catch-up contribution. 

You can take penalty-free withdrawals at age 59½. But just because you can doesn’t mean you should. Talk to an advisor to be sure you understand how your plans might be affected.

Get retirement ready by building emergency savings, reducing debt and planning ahead for medical needs. Since Medicare doesn’t start until age 65, think about how you’ll pay for health insurance if you retire before.

This is a good time to plan your strategy for Social Security. Here again, just because you can collect at age 62 doesn’t mean you should. In fact, you get an 8% pay raise each year you wait to collect.

In Your 70s – Plan for RMDs

If you’re still working, you won’t have to worry about required minimum distributions (RMDs) yet.

If working days are behind you, make sure you know when you will need to take RMDs from retirement funds. The age when you are forced to begin taking distributions is based on your date of birth. 

If you are enjoying the results of your retirement savings efforts, congratulations! But the planning is not done yet. Talk to an advisor about asset protection, estate planning, charitable giving and legacy planning.

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.