Common Financial Milestones by Age

Financial Milestones Examples for Your 20s

Achieving Financial Independence From Your Parents

After living with your family all your life, you’ve finally left the nest and ventured out on your own. If you haven’t already, your first goal should be to become financially independent from your parents.

Of course, any help from them with things like your phone bill, insurance, etc., while you’re going through college will go a long way. But ultimately, you should aim to take over those financial responsibilities as soon as possible.

Saving an Emergency Fund

Once you can fully support yourself financially, the next step is to build an emergency fund.

Shop around for a savings account with a high annual percentage yield (4.5-5%), budget out how much you can put away each month, and gradually start saving. Ideally, you’ll want enough in your emergency fund to cover at least six months' worth of expenses

This financial safety net will give you room to breathe if you’re ever in between jobs or dealing with a medical issue for an extended period of time.

Securing Your Own Health Insurance

If you were on your parent’s health insurance growing up, the gravy train stops once you hit 26 years old.

Luckily, many companies offer health insurance benefits for full-time or even part-time employees. If yours doesn’t, you can search for the right individual plan for you on the marketplace.

Putting Away at Least One Year’s Salary for Retirement

It may be forty years down the road, but it’s never too early to start saving for retirement. If your employer offers a 401k plan, be sure to take advantage of it and do your best to contribute enough to get a match from them.

You can also open an IRA or a Roth IRA to grow your nest egg even more.

Opening an Investment Portfolio

Getting started can be intimidating if you’re totally green to the stock market and investments as a whole. But the sooner you get acquainted with it, the quicker you can start building a diverse portfolio of assets that makes money for you.

A great place to start is to write down your investment goals. How much are you willing to invest? How much risk are you comfortable with? Do you want to tap into the real estate market?

These questions will give you a clear jumping-off point that you can use to either learn the ropes yourself or enlist the help of a financial advisor.

Financial Milestones Examples for Your 30s

Paying Off Your Student Loans

The typical student loan term is around ten years, but according to SoFi, it takes the average borrower around twenty years to fully pay off their loans.

Of course, the amount you owe will vary based on the education you received and the terms of your loans, but the goal should be to have them fully paid off or as close to it as possible by the age of 40.

Begin Saving for Your Child’s Education (If Kids Are in Your Plan)

Whether you’ve already started a family or are planning to, now’s the time to start putting money away for your kids’ college funds. However, rather than simply creating a separate savings account for them, you may want to look into a 529 college savings plan.

These accounts allow you to save money for your kids’ college tuition and any related expenses (living costs, textbooks, etc.), and can even come with state or federal tax advantages.

The best part?

When the time comes, you can withdrawal money without worrying about it getting taxed.

Buying a Home (If it’s in Your Plan)

Purchasing your first home is one of life’s biggest financial milestones, and if you’re like most buyers, you’ll be pulling the trigger sometime in your 30s.

But if you already have enough on your financial plate, there’s no need to rush it. A mortgage is far from the only cost you’ll be responsible for as a homeowner, after all, and it’s a choice that'll impact your finances for decades.

So, talk with your partner and, if applicable, your financial advisor, and decide when the time is right for you and your budget.

Financial Milestones Examples for Your 40s

Having Enough Saved to Put Your Kids Through School

If you had kids in your 20s or 30s, having enough put away to send them to college should be one of your main midlife financial goals.

However, think of it like a “Shoot for the moon, land among the stars” type of situation. Even if you don’t end up saving the target amount, the fact that you worked toward it throughout your 40s will mean you’ve made significant progress and are likely close to the finish line.

Diversifying Your Portfolio

Stocks, bonds, rental properties—the more diverse your portfolio, the safer your nest egg will be from changes in the market.

As you move through this stage of your life, find and explore different investment options that fit best into your financial plan. That way, if you experience losses in one area, the rest of your gains will be protected.

Creating a Will & Trust

Now that you’ve built a legacy, it’s time to make sure you can safely and smoothly pass it on. Meet with an estate planner or your established financial advisor to iron out the details of your estate plan, create a living will and trust, and set up a power of attorney.

Otherwise, you could leave your family at risk of going through a lengthy and expensive probate process to determine which of your assets go to whom.

Continue Building Your Retirement Fund

By the time you hit 50, it’s recommended to have around six years’ salary stowed away for retirement.

Financial Milestones Examples for Your 50s

Re-evaluating Your Retirement Needs & Saving More if Necessary

With your parents entering their twilight years, you may need to account for caregiving and other retirement expenses.

Take the time to revisit your financial plan and make any necessary changes to ensure its smooth sailing into retirement.

Entering the Homestretch

With your kids’ college funds covered and your estate plan squared away, you can put your full focus on saving for retirement. A good goal to shoot for is having around eight years’ salary put away by 60 years old.

Financial Milestones Examples for 60 & Up

Entering the Homestretch

By the time you retire, you should aim to have around ten years’ salary saved up.

Depending on your financial plan, more or less may be ideal for you. But with the timeline provided in this guide, your previous decades of consistent savings should leave you plenty to work with.

Paying Off Your Mortgage & Other Debts Before You Retire

As we’ve covered in a previous blog, it’s crucial to have your mortgage, credit cards, and other debts paid off before retirement. That way, the only time you’ll be pulling from your retirement fund is for living expenses, fun activities with loved ones, and much-deserved vacations!

Once you cross the finish line and enter retirement, just be sure to take out your required minimum distributions in time (if applicable) to avoid tax penalties.

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