From Young Professional to Retiree: Financial Milestones for Every Age and Stage

By Lindsay Brock, CFP^®, Partner and Wealth Advisor at Stearns Financial Group

Life is a journey, and so is financial planning. From the carefree days of early adulthood to the golden years of retirement, each stage comes with its own set of financial challenges and milestones. Whether you’re just starting out or planning your legacy, there’s always something to check off your financial to-do list. And as life spans become longer with the passing years, planning for retirement at an earlier age has never been more important.

Of course, not everyone follows the traditional script – house and kids by 30, retire right at 65. As a financial advisor, I often think of life in two major stages: accumulation and decumulation. Throughout the accumulation period, key milestones can help set the foundation for a comfortable retirement – one where you can enjoy the fruits of your hard work without worrying about outliving your savings.

Should You Follow Age-Based Milestones or Focus on Life Stages?

Life rarely goes as planned, and financial planning is no exception. While age-based milestones provide a general guideline, it’s often more practical to focus on life stages. A 29-year-old with a spouse, children and a mortgage will naturally have vastly different financial needs than a 29-year-old who just finished med school and is mid-residency. Planning should fit where you are in life, not just the number of candles on your birthday cake.

Early Accumulation (20s, 30s, early 40s):

This phase is all about laying the groundwork for financial security. The choices you make now – big or small – can set the foundation for a stable and rewarding future.

• Open Accounts: If you haven’t already, it’s time to establish checking and savings accounts. This simple step marks the beginning of financial independence and opens the door to smart money management.
• Start Saving: Developing strong savings habits early is key. Aim to set aside three to six months of expenses for emergencies – it’s a cushion that can keep you afloat in uncertain times.
• Build Credit: A solid credit history is essential for future financial flexibility. Using a credit card responsibly – paying it off in full each month – helps establish good credit. Consider using it for routine purchases like gas or utilities and paying them off immediately to build positive credit habits.
• Plan for Retirement: Albert Einstein famously said: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” The earlier you start contributing to a 401(k) or similar retirement plan, the greater the advantage of compound growth.

Chart 1: Anna (in blue) starts saving $3,000 a year at age 25, with an annual increase of 1% in the rate of contribution. Adam (in orange) saves the same amount, but starts a decade later, at age 35.

• Budget Wisely: A budget is one of the most powerful financial tools at your disposal. The 50/30/20 model is a great place to start – allocating 50% of your income to necessities like housing and food, 30% to wants or discretionary spending like vacations and dining out and 20% to savings ensures balance while allowing room for both responsibility and enjoyment.
• Pay Down Debt: If student loans or especially credit card balances are lingering, now is the time to create a plan to tackle them. Prioritizing debt repayment ensures financial flexibility later on, freeing up resources for investment and long-term wealth building.

Mid-Accumulation (30s, 40s and 50s):

At this stage, financial planning shifts from building the foundation to fine-tuning long-term strategies. With retirement on the horizon, now is the time to make intentional decisions that will shape your future security and flexibility.

• Have the Big Conversations: If you have a partner, now is the time for deep financial discussions. Align your vision for the years ahead – whether it’s traveling more, supporting your children’s education or setting up retirement plans that fit your shared goals. Open communication ensures you’re moving in the same direction financially.
• Childproof Your Finances: If you have kids, start planning for their future. A 529 plan can be a powerful tool for college savings, offering tax advantages that help grow funds over time. With about 10 years until college, you’ll currently need around $350 per month, per child to fully fund a four-year public university – a helpful benchmark as you map out contributions.
• Beware of Lifestyle Creep: As your income grows, it’s easy for spending to follow suit –  sometimes at an even faster pace. What once felt like a luxury in your 20s, like multiple vacations a year, designer clothing or a high-end car, now may be considered a necessity. While rewarding yourself is important, unchecked lifestyle creep can significantly impact long-term savings, especially with retirement just a couple of decades away. Stay intentional with spending, periodically reassessing needs versus wants and ensuring financial goals remain the priority. Future-you will thank you!
• Increase Your Savings: As your career progresses, make it a habit to increase contributions to your retirement accounts whenever possible. Even small annual adjustments – like raising your retirement savings rate by 1% a year – can make a significant impact over time. If you’re able, consider maxing out your 401(k) contributions to take full advantage of tax-deferred growth. (Consult with your advisor to see if Roth or after-tax savings would be better for you instead!)

Late Accumulation:

As retirement draws closer, it’s time to shift from building wealth to fine-tuning your financial security. This phase is all about making sure your savings, investments, and lifestyle plans align with the future you envision.

• Review Your Goals: Take a close look at your financial picture, and perhaps create a formal financial plan, or Financial Independence Roadmap^© – are you on track to retire when you want? Will you carry any lingering debt into retirement? Now is the time to assess where you stand and make adjustments to ensure a smooth transition.
• Fine-Tune Your Retirement Plan: Make sure you’re still saving enough each month to stay on track for the retirement lifestyle you want. This isn’t just about covering the basics – it’s about ensuring you have enough to support your vision of retirement, whether that includes travel, hobbies or other long-term goals.
• Eliminate Debt: Reducing debt before retirement can help maximize financial flexibility. Pay down car loans, mortgages, and any remaining liabilities so you’re not burdened by extra expenses when your income shifts to retirement distributions. Just as important – avoid accumulating new debt by living within your means.
• Maximize Catch-Up Contributions: If you’re 50 or older, you can increase contributions to your retirement accounts beyond standard limits. These catch-up contributions are a great way to bolster savings in the final stretch before retirement.
• Plan Your Withdrawal Strategy: A solid distribution plan can make a big difference in how long your savings last. Consider how you’ll withdraw funds efficiently, balancing tax implications and ensuring a steady income throughout retirement.

When is the Best Time to Start Working with a Financial Advisor?

There’s no single “perfect” moment to seek professional financial guidance, but working with a financial advisor can be especially valuable when facing major financial decisions or transitions. Here are some key moments when expert advice can make a meaningful difference:

• Navigating Major Life Transitions: Events like marriage, divorce, having children, career changes or the loss of a loved one all come with financial complexities that may require careful planning and timely decisions. A financial advisor can help you adapt and stay on track.
• Nearing Retirement: As retirement approaches, having a well-structured financial plan becomes even more critical. An advisor can help ensure you’re saving enough, strategizing withdrawals wisely and maximizing financial security for your golden years.
• Managing Complex Financial Situations: If you have significant assets, tax considerations or estate planning needs, professional guidance can help you optimize wealth management, minimize tax burdens and ensure long-term financial stability.

No matter when you begin, the most important thing is to stay proactive, adaptable, and committed to your financial goals. Planning for the future isn’t about checking off boxes – it’s about creating a secure, fulfilling life on your terms. So, keep making smart financial moves, stay flexible, and enjoy the journey!

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Lindsay Brock, CFP^®, is a wealth advisor based in Greensboro, North Carolina, helping clients uncover their needs and achieve their financial goals. She works closely with individuals and families to simplify the complexities of significant wealth by developing strategies in investment management, estate and financial planning.

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