4 min read

Retirement Planning by the Decade pt 1

As your life, career and finances evolve, so should your retirement planning strategies. This isn’t a one-time process. Laying the foundation for a secure and satisfying retirement takes decades, and it starts earlier than you might think. By the time you reach 50, a lot of the pieces should already be set in place. These are just some of the things to think about at every stage.


Kids and Teens

A kid who’s thinking about getting her first babysitting job isn’t thinking about retirement – nor should she be. But financial literacy starts in childhood, so parents and guardians should be thinking ahead to those big-picture financial issues when teaching kids about money.


During their first few decades of life, kids should be learning about the basics of personal finance. Parents can help by enforcing guidelines around saving and spending; explaining how investments work; and teaching kids about compounding interest, budgeting and the dangers of debt. This is also the time for parents to establish and share some family values around money. No kid wants to hear that a trip to Disney World isn’t going to happen because it would require dipping into the family’s savings, but these kinds of discussions do have a lot of value in helping kids understand the realities of budgeting.


Parents should also step in with guidance when kids start earning their first paychecks. Helping a child open a ROTH IRA allows them to save and grow that money tax-free.



The real work of planning for retirement starts when school ends. Your 20s are a time to focus on minimizing debt and establishing accounts that will really pay off down the line. Start investing, and if you commit to a spouse or partner during your 20s, talk about financial goals and retirement planning.


Grappling with student loans is one of the biggest financial challenges that can come up for workers in their 20s. Paying off those loans as quickly as possible isn’t necessarily the right goal, however. For a 20-something who has student loans and credit card debt with high interest rates, it’s generally wisest to get a long payback period for the student loans and pay down the credit card debt first. Consolidating student loans to lower the payment amounts is another potentially shrewd move.


One of the best things someone in their 20s can do to prepare for retirement is to find a company that has a 401(k) match. ROTH IRAs and HSAs are also great savings vehicles. HSA funds can grow tax-free, and you can roll over your funds to a new HSA if you move to a new company that offers this benefit.



Retirement planning efforts shift into a higher gear during your 30s. This is the time to start thinking about estate planning, if you haven’t yet gotten underway. Having a child, buying a house and/or getting life insurance often starts the ball rolling with this process.


Home ownership and parenthood come into play for a lot of 30-somethings. Parents of young children may decide to set up 529 plans and/or UTMA accounts to save for their future educational needs. A home is a major asset, so making this purchase is inevitably tied to retirement planning. Young buyers often underestimate the true cost of home ownership, forgetting to take into account things like taxes, insurance, utilities and ongoing maintenance.


Establishing a solid safety net is an important part of planning for your later years. If a future event takes away or diminishes your earning ability, your retirement may depend on the protection afforded by insurance. Someone in their 30s who has a spouse and/or children may consider term life insurance with a term that covers the person’s projected working years. If the insured worker dies before reaching retirement, this coverage will help replace that lost income during those years. To prepare for short-term income loss, like from a salary reduction or a long medical leave, 30-somethings should also have at least six to nine months of living expenses in an emergency fund.


One of the most important things to keep in mind about financial planning in your 30s is that money has time value. Pay yourself first and keep saving, even as your career and finances fluctuate. Put that money to work now to compound it and capitalize your earnings.



In your 40s, any number of major life changes could affect your retirement planning decisions. Divorce derails financial plans for a lot of people at this time of life. If one spouse was counting on having their husband’s or wife’s Social Security and retirement benefits, getting divorced requires making new plans. And if you had kids in your 20s and/or 30s, in your 40s you’ll probably be thinking about paying for their educations. Whether it’s affording private elementary school or deciding what kind of loan burden to let college-bound kids bear, these are decisions that a lot of 40-somethings grapple with.


Paying for college is one of the biggest financial challenges that parents commonly face during this decade. Some decide to use their own retirement savings to pay for tuition, or let their kids take out huge student loans without teaching them about the cost and impact of these loans. (Although letting your child take out massive loans isn’t ideal, it’s generally preferable to you using your retirement savings. Remember they can borrow money for school, but you can’t borrow money for retirement.)


A lot of people need to make adjustments to their financial and retirement plans in their 40s. Their kids approach adulthood, their careers may either take off or stall out, and retirement is closer than ever. People with high-risk investments often start the shift to a more conservative portfolio around this time. Some late bloomers only start retirement planning in a serious way once they reach their 40s.


Everyone’s timetable and financial goals are unique, so your retirement plans should be unique to you too. The financial planning team at Sachetta is here to help you make the right financial decision at the right time in your life. Contact us today to get started.