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Mastering Your Personal Finances – A Guide With Advice for Every Decade:

What should be your financial priorities in your 20’s? How do they differ from those in your 30’s? Or 40’s? Or 50’s and beyond? Here is a short guide to help you ensure you are getting on, and remain on the right track to reach your financial goals.

Included for each decade are retirement savings targets, general savings goals and important age milestones in each decade.


Saving and Investing in Your 20’s – Getting On the Right Track


Your 20s are all about getting off on the right foot. Because of compounding interest, every dollar that you can save now is equivalent to savings many more dollars later. (For more – see our post “The Case for Saving For Retirement First”)


Here are some rough guidelines and goals as you begin your saving and investing career:


Retirement Savings in You 20’s:


Goals/Targets: 1X your desired annual income in retirement should be in retirement savings before age 30.


If you estimate that you will need $50,000 per year in retirement income, you should aim to have $50,000 in retirement savings prior to turning 30.

There are a lot of variables to consider, but for someone age 25 making $50,000 per year, this means saving approximately 15% of your income. Remember to include your company’s matching contributions if available!

Here are a few scenarios for savers in their 20’s using out Compound Interest Calculator: (Plug in your own numbers here: http://www.hyllandcapital.com/blog/compound-interest-rate-calculator )


Saving in Your 20s


Already we can see the benefit of getting started saving early.


Related topics we may discuss with Investment management clients in their 20’s: (Remember, we are not like the other guys – we have no account minimums!)

  • Asset Allocation – You have a long road to travel before even considering retirement. Where should you money be saved and invested to achieve adequate returns?
  • Taxes – More than likely you are in a lower tax bracket than you will be for the remainder of your working career. How can we take advantage of you low tax bracket now to benefit you later?
  • Setting up your retirement accounts - You may have a 401(k) at your work, which funds are right for you? How can you take the most advantage out of your company’s match?


Savings Goals in Your 20’s:

  • Emergency Fund – at least large enough to fund 3 months of expenses. Building up to 6 months before age 30.
  • Buying a home or any other expected large expenses – What is on your horizon? A new car? Buying a home? Starting a family? Start saving for down payments
  • Make it automatic – Establish appropriate saving discipline now and it will stay with you for the rest of your life. Set up automatic contributions into retirement accounts, automatic withdrawals from your paycheck into your savings accounts and automatic bill pay to avoid those late fees and interest charges.


Related topics we may discuss with financial planning clients in their 20’s:

  • Savings plans
  • Budgets
  • Improving your credit score
  • Student loans
  • Other debts


For financial planning clients, we make a specific plan factoring in your unique circumstances to get you well on your way to financial independence.




Important Ages in Your 20’s:


-Age 24: Any savings bonds (series I or series EE) purchased at the age of 24 or later are eligible to have all or a portion of interest earned be excluded from your gross income if used for qualified education expenses.

Related topics we discuss with financial planning clients:

·         College Savings – It is never too early to start saving for your, or your children’s, future. One option that exists is using savings bonds, which may qualify to be tax-free investments if used for qualified education expenses. And, these bonds can be purchased before your child is even born, helping you get a head start on saving. We will help you evaluate the best way for you to save for future educational expenses. 


-Age 24: “Kiddie tax” no longer applies if you are a full time student. Previously, if you were a full time student under the age of 24 and had greater than $2,100 in investment income, your tax rate on that income would be levied at your parents’ tax rate, and not yours. After age 24 this rule no longer applies.


-Age 26: You can remain on, or be added on your parents’ health insurance plan until you turn 26. At age 26 it’s time to get health insurance of your own.

Related topics we may discuss with financial planning clients:

  • Evaluation and comparison of plans available – What are the costs? What are the deductibles? How do the coverages differ?
  • High Deductible Health Care Plans with Health Savings Accounts (HSAs) vs. standard policies with Flexible Spending Accounts (FSAs). Which is right for you?

o   Investment plan for HSAs – If applicable



Saving and Investing in Your 30’s – Setting Up for Long Term Success


A lot happens in your 30’s and it gives you plenty to think about. Your family may be growing and your career advancing – What can you do to ensure you are financially stable?

You may have a lot of liabilities added to your life as well. A house along with its upkeep and mortgage payment. A child with its added expenses today, while not forgetting about future college/education savings. And you are vital to the success of your family as well – is your family protected if you become disabled?



Here are some rough guidelines and goals to keep you on course:


Retirement Savings in Your 30’s:


Goals/Targets: Have 3X your desired retirement income in retirement savings before you turn 40.


This means someone who desires $50,000 in retirement income should have at least $150,000 in retirement savings prior to turning 40.


Running a few scenarios through our simple Compound Interest Calculator again, we are going to start to see the benefit of starting to save early.

(There are so many variables possible here. How can you find out if you are on track to save for retirement? Head over to our Compound Interest Calculator where you can fill in the blanks to suit your financial condition.)


Saving in your 30's



A general rule: Assuming you need $50,000 in retirement income and therefore want $150,000 saved up by age 40 – If you make $50,000 currently, you need to save 15% of your income starting at age 26, assuming a 5% growth rate.


Some related topics we may discuss with investment management clients in their 30’s:

  • Asset Allocation – Are you investments set up to provide returns for the next couple decades?
  • Stock options, bonuses, stock purchase plans and other perks – What additional benefits does your employer offer? Let’s make sure you are taking advantage of them all and doing it wisely.
  • Investment Account Options – Is a ROTH IRA better for you? Or a traditional IRA?
  • Small Business Accounts – Have a side gig or full time personal business? How do you manage your short term and long term investments?



Savings Goals in Your 30’s:

  • Emergency Fund – As your liabilities grow, make sure your emergency fund does as well.
  • Retirement Savings – The clock is ticking with respect to the time you have for compounding interest to have an effect on your portfolio. It is important to be allocating sufficient amount to retirement savings.



Related topics we may discuss for Financial Planning Clients in their 30’s:

  • Insurance – From your health insurance to life insurance. Will your family be alright if something were to happen to you? Remember, Hylland Capital Management is a FEE ONLY financial planner. We make no money on commission from insurance products. Our only concern is that you are adequately protected with a policy that is right for you.
  • College Savings – With the cost of higher education only rising, it’s important to get a start on saving for your children’s next step. Is a 529 option the best choice? Or a Coverdell Savings Account? What is the best option for your family?
  • Debts – From mortgages and student loans to credit cards. Repayment strategies, refinancing or consolidation. What’s the right course of action for you?
  • Long Term Goals – What are your long term goals? Maybe you have an idea for a side business? Maybe you want to start giving to charity? Maybe you have an early retirement in mind? Let’s get you set up to pursue and reach your biggest long term goals.



Important Ages in Your 30’s:


Age 30: Coverdell Education Savings Accounts must be distributed within 30 days of the beneficiary reaching age 30.



Saving and Investing in Your  40’s – Managing Risk and Keeping Discipline


Your career is in full swing - More than likely you are making more money than you have at any other point in your life. As a result of your financial discipline your savings may also be at the highest they have ever been. Now it’s about protecting your assets while continuing to stay the course.


Retirement Savings in Your 40’s:


Goals/Targets: Before you turn age 50, aim to have 6X your desired retirement income in retirement savings.


This means that someone needing $50,000 in retirement should have $300,000 in retirement savings prior to turning 50. How much do you need to save to make that happen? Here are a few scenarios:



Saving in your 40s




Some related topics we may discuss with investment management clients in their 40’s:

  • Reducing Risk – Now is the time to reevaluate the risk level of your portfolio. Your savings life is nearly half over, let’s protect what you have worked so hard to save.
  • Managing Multiple Retirement Accounts – Do you have abandoned 401(k)s or other retirement accounts from previous employers? Maybe a rollover IRA is right to get your accounts consolidated and under one roof.


Savings Goals in Your 40’s:

  • Keep it up! You have come a long way. Don't ruin your progress by excessive spending or halting retirement contributions.


Some related topics we may discuss with Financial Planning clients in their 40’s.

  • Insurance – A lot may have changed in the last decade. Are the amounts you are ensured for still sufficient?



Saving and Investing in Your 50’s – Retirement Within Sight!



Your 50’s are your last hurrah to full time working life, make the most of it! You are allotted extra contributions into retirement accounts and may begin to start withdrawing your retirement accounts as well.

Retirement approaches, are you ready?


Saving and Investing in Your 50’s:


Goals/Targets: Aim to save 8X your desired retirement income in savings prior to turning 60 years old.


This means that someone needing $50,000 in retirement should have at least $400,000 in retirement savings prior to turning 60. How much do you need to save to make that happen? Here are a few scenarios:


Saving in Your 50s

Now, more important that your current contributions is the benefit of compounding interest. It is not until this time in your life where we start to truly see the benefits of saving early. In our example above, starting to save at age 30 means you can save just 50% compared to what someone who does not start saving until age 40 has to save.



Topics we may discuss with investment management clients in their 50’s:

  • Retirement Contributions – Beginning in your 50’s you are able to put much more money away for retirement.
  • Risky Investments – As you grow old, the potential risk of having substantial assets all dependent on one company grows. Start to evaluate winding down stock options, company stock, and others.
  • Evaluate other investment options – Is an annuity right for you? Now is the time to start considering some alternatives.


Savings Goals in Your 50’s:

  • Save, save, save! – This is likely your last full decade to save before retirement. Get your plan together, know the numbers you need to hit and save aggressively.


Topics we may discuss with Financial Planning Clients in their 50’s:

  • Mortgage – It’s time to start preparing to eliminate your expenses going into retirement. Are you a recent empty nester? Maybe it is time to downsize. Is your mortgage paid off? If not, Let’s create a plan to get those payments finished. 
  • Retirement Financial Plan – Now is the time to get specific on your retirement cash flow. How much do you need to maintain your desired standard of life in retirement?


Important Ages in your 50’s:

Age 50: If you are age 50 or older at the end of the calendar year, you are eligible for “Catch Up” contributions for your qualified retirement plans.

  •  For those with a 401(k), 403(b), SARSEP or 457(b) that means you are eligible to contribute an extra $6,000 per year, for a total of $24,500 per year into your retirement account (values as of 2016).
  • For those with a SIMPLE IRA or SIMPLE 401(k) that means you are eligible to contribute an extra $3,000 per year, for a total of $15,500 per year into your retirement account.
  • For those with Traditional IRAs or ROTH IRAs that means you can contribute an extra $1,000 per year, for a total of $6,500 per year in your retirement account.


Related topics we may discuss with financial planning and investment management clients:


  • Are you on track for retirement?

o   Do you need to take advantage of catch up contributions? How will your budget change in order to take advantage of catch up contributions?


Age 55: If you are 55 or older, you are eligible to contribute an extra $1,000 per year to a Health Savings Account.

Age 55: You may be eligible to take money out of a qualified retirement plan (like your most recent 401(k) )  penalty free if you just retired, quit or were laid off.  

Age 59.5: Generally, distributions from IRAs and Roth IRAs are subject to an additional 10% tax if taken before the age of 59 and a half.



Saving and Investing in Your 60’s

 One last look before you leap! Here is your last chance to ensure you are prepared to retire. What are some last minute things you can do in your 60's? read on:


Retirement Savings in Your 60’s:


                Goals/Targets: Have 11X your desired retirement income in savings prior to retirement.


This means someone requiring $50,000 in retirement income should aim to have at least $550,000 in retirement savings prior to retirement.

What kind of savings plan does it take to build up that kind of retirement savings? Take a look at a few scenarios (Here, we are going to assume a retirement age of 65):


Saving in your 60s




Topics we may discuss with investment management clients in their 60’s:

  • Taxes – Your tax rates may be ready to change drastically as you go from working to retired. What actions do we need to take now, and what should be saved for later?
  • Asset Allocation – While balancing risk, it is important that your portfolio is set up to still be able to produce returns in order to maintain your standard of living. What is your appropriate asset allocation?


Savings Goals in your 60’s:

  • Don’t take on extra liabilities – Your children may be grown up and still want your help, but don’t risk your savings to co-sign for loans.
  • Emergency Savings – Begin building up 1-2 years’ worth of expenses in cash for safety. As the potential for medical bills, family emergencies and stock market corrections rise, ensure you have a large safety net available.


Topics we may discuss with financial planning clients in their 60’s:

  • Retirement cash flow – By now we should have a good idea of what you need coming in every month for retirement. How can we do that with the least amount of risk? Now is another time to look at cash producing assets, from bonds to annuities and see how they fit within your savings.



Important Ages in your 60’s:

Age 62: You can start taking Social Security as early as age 62, but your benefits will be reduced.

Age 65, 66 or 67: Depending on your year or birth, you are eligible for full social security retirement benefits.

Related topics we discuss with financial planning clients:

  • When is the best time to begin taking social security? As soon as you turn 62? Or is it better to delay and take advantage of the increased benefits?


Age 65: Most people age 65 or older are eligible for Medicare part A. The Social Security Administration recommends applying 3 months before your 65th birthday.



Saving and Investing in Your 70’s


Now it is time to enjoy your years of hard work. But there is a lot going on. Your retirement accounts must start to be withdrawn from – creating potential taxes and headaches. You must ensure your quality of life is maintained, because income will be hard to come by. And you have the future generations to worry about, what will be your legacy?


Retirement Savings in your 70’s:

  • Portfolio Risk – Permanent losses at this point may be devastating without an income to replace your lost savings. Are your investments allocated correctly?
  • Taxes – How can we manage your investments now to ensure the smallest tax burden as your withdrawals begin?


Topics we may discuss with investment management clients in their 70’s:

  • Ensuring your spending and withdrawal rate is sustainable.
  • Required Minimum Distributions (RMDs) – How are they calculated and what is the most tax efficient way to make your withdrawals?


Savings Goals in your 70’s:

  • Monitor spending levels
  • Health Care – Health care expenses tend to increase dramatically as you age. Ensure you have a large enough cash savings buffer.


Topics we may discuss with Financial Planning Clients in their 70’s:

  • Calculating your RMD and ensuring you are not penalized for failing to withdrawal at least the required amount.
  • Inflation – You will likely have decades to live, even modest inflation will erode your savings significantly. What is the best way to ensure your savings maintains its purchasing power?
  • Estate Planning – How can you set up your assets to be passed down with the least headache possible?
  • Philanthropy – How can you leave a lasting legacy to the causes you support most?


Important Ages in your 70’s:

Age 70: The increase social security benefits for delaying retirement stop.


Age 70.5: Contributions cannot be made to your traditional IRA for the year in which you reach age 70.5 (or any year later).

Also: Generally, you must begin to take Required Minimum Distributions (RMDs) starting on the April 1st after you turn age 70 and a half. These minimum distribution rules apply to traditional IRAs, SEP IRAs, Simple IRAs, 401(k)s, 403(b)s, 457(b)s, and profit sharing plans.



Are you ready to get on a course to achieve your financial independence? Have questions about anything mentioned above? Contact us today:


Matt Hylland