Financial Moves to Make in Each Decade of Your Life

In Your 20s

Think of your 20s as the starting line of your financial life. Now is the time to build a strong foundation—and your credit health is a big part of that. Your credit scores are shaped by the information on your credit reports—which reflect your payment history, debt balances, available credit and more.

Establishing strong credit in your 20s may involve getting your own credit card or, if you're not able to be approved, getting a secured credit card or becoming an authorized user on someone else's account. With credit accounts, aim to consistently pay your bills on time and keep your credit usage below 30% of your available limit.

Other Money Moves to Make in Your 20s

• Make a budget that accounts for fixed expenses, flexible spending and financial goals. This will help you stay financially accountable and determine how much you can put toward short- and long-term savings goals.
• Begin contributing to a 401(k) or individual retirement account (IRA).
• Start building your emergency fund in a high-yield savings account to cover unexpected expenses with cash rather than credit.

In Your 30s

You may have clearer financial goals in your 30s, which might include buying a home. Shoring up a 20% down payment has long been the golden rule, but some mortgages require as little as 3%. No matter what you choose, buying a home can help grow your wealth over the long term. Here are some steps for saving for a down payment:

• Automate your savings.
• Reduce your expenses.
• Pick up a side gig.
• Meal plan and dine out less.
• Put cash windfalls like tax refunds and work bonuses toward your home fund.

Other Money Moves to Make in Your 30s

• Buy life insurance to help protect your family's finances. Some policies also accumulate a cash value that can provide income throughout your life.
• Open 529 savings plans for your children or other relatives and begin building their college funds.
• Aim to set aside 15% of your income for retirement.

In Your 40s

Focus on tightening up your finances as you move toward your long-term goals. Many people in their 40s carry high-interest debt like credit cards and personal loans. Interest charges on these balances could add up to a major expense in the long run. Here are some action items for paying them off:

• Check to see what debt is listed on your credit report.
• Calculate how much you can put toward debt payments.
• Modify your budget.
• Choose a debt repayment strategy.

Other Money Moves to Make in Your 40s

• Top off your retirement accounts by maxing out your contributions.
• Reevaluate your financial goals and make a plan for reaching them.
• Consider investing outside of your retirement accounts. You might do this with a brokerage account or by exploring alternative investments such as real estate.

In Your 50s

You'll likely still be working in your 50s, but retirement may be just around the corner. Consider connecting with a financial advisor to make sure you're on the right track. The two of you can determine:

• What is your retirement vision and how much it might cost?
• What will your income sources in retirement be?
• Are you and your partner on the same page about retirement goals?
• Is your current savings strategy enough to get you where you want to go?

Other Money Moves to Make in Your 50s

• Consider downsizing to save money on housing.
• Make retirement catch-up contributions.
• Think about buying long-term care insurance.

In Your 60s

You can start collecting Social Security at age 62, but you'll receive a larger benefit if you wait until your full retirement age. That's 67 for anyone born in 1960 or later. Your benefit will increase even more if you delay it up to age 70. Think about enlisting the help of a financial advisor, especially if you'll be leaving the workforce soon. They can look at your assets and help you figure out the most tax-efficient way to draw on your nest egg. If you'll be relying on money in tax-deferred retirement accounts, withdrawals will count as taxable income.

Other Money Moves to Make in Your 60s

• Plan for health care costs in retirement—and remember that Medicare generally doesn't begin until age 65.
• Consider a more conservative asset allocation. That can help protect your portfolio from market volatility.
• Revisit your estate plan to ensure that your wealth will be passed on according to your wishes. It's also wise to name a power of attorney to handle medical and financial decisions on your behalf if necessary.

In Your 70s and Beyond

Staying invested in your 70s and beyond can help you keep pace with inflation. According to T. Rowe Price, the following asset allocation is advised for folks who are 70 and older:

• Up to 20% cash
• 40% to 60% bonds
• 30% to 50% stocks

Holding some cash is important because it can help you cover unplanned expenses in retirement. It can be difficult to access money that's tied up in bonds and certificates of deposit (CDs). With stocks, you may have to sell shares at a loss to generate immediate cash.

Other Money Moves to Make in Your 70s

• Look for senior discounts on your home and auto insurance.
• Be aware of financial scams that target seniors.
• Think about your legacy plan. Instead of leaving a large inheritance, for example, you might choose to pay for a grandchild's tuition while you're still alive.

The Bottom Line

Being smart with your money is important at every age—and each decade has its own financial challenges and opportunities. Knowing what to expect can help you plan accordingly. When all is said and done, the right money moves for you will depend on your unique financial situation and goals.

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