Wealth Management for Every Life Stage

wealth management man holding child

No matter your age or stage of life, it’s never too early or too late to start thinking about your financial future. Proper wealth management can set you up for long-term success and stability.

Here’s an overview of wealth management strategies for different life stages.

Your 20s

Your 20s are a time of significant life transitions – graduating college, getting your first “real” job, and moving out on your own. While you may have little discretionary income, now is the time to set the groundwork for future financial security.

  • Start an emergency fund. Aim to save 3-6 months’ living expenses in a savings account as a cushion against unexpected costs.
  • Contribute to your workplace retirement account, especially if your employer offers matching contributions. Funds invested now have decades to grow and will benefit from the power of compound interest.
  • Build your credit history responsibly by getting a secured credit card, paying bills on time, and keeping credit card balances low. Good credit will help with future loan applications.
  • Live below your means. Track your income and expenses to get a handle on spending and start developing a budget.
  • If someone else depends on your income, consider purchasing term life insurance. Term policies are affordable and protect your loved ones.

Your 30s

Your 30s are prime earning years, making them ideal for ramping up investments and savings. It’s also the decade when many people get married and start families.

  • Increase retirement account contributions to max out employer matching if available. Boost savings in IRAs or other investment accounts. Consider a Roth IRA if you qualify or if it’s an option in your company’s plan.
  • Review and update beneficiary designations on retirement accounts and insurance policies if your family situation has changed.
  • Build a diversified investment portfolio that aligns with your risk tolerance and time horizon. Consider a mix of stocks, bonds, real estate, and other assets using low-cost index funds or ETFs.
  • Draft or update your will and establish powers of attorney for finances and healthcare. These documents provide security if you become incapacitated and ensure your assets will be distributed in accordance with your wishes.
  • Consider purchasing life insurance if you have dependents. You can use a life insurance calculator to determine the coverage you need.
  • Increase emergency savings to cover at least six months of expenses. Save for other goals like home, college, or starting a family.

Your 40s

Your 40s are the peak earning years for many and a time of career advancement. College costs may loom for your kids soon. Retirement is on the horizon but still at least 10-15 years away.

  • Max out contributions to retirement accounts like 401(k)s and IRAs.
  • Make sure your investment portfolio aligns with your desired retirement lifestyle. Consider a slightly lower allocation to stocks to reduce risk.
  • Have at least one year of living expenses in an emergency fund.
  • Calculate projected costs for college if it applies and ramp up college savings in 529 plans or other accounts.
  • Review insurance needs – life, disability, long-term care – and increase coverage if necessary—update beneficiaries.
  • Get serious about reducing debt, especially credit cards and loans with high-interest rates. Paying off debt boosts cash flow.
  • Consider meeting with a financial advisor to review your financial picture and create a retirement plan.

Your 50s

Age 50 is a milestone when catch-up contributions for retirement accounts become available. The kids may be leaving the nest, and you’re likely in your peak earning years. Retirement is on the horizon.

  • Make the most of higher contribution limits on retirement accounts. Balance savings between retirement and taxable accounts.
  • Consult a tax professional about strategies to reduce your tax burden in retirement, like Roth IRA conversions.
  • If you plan to retire early, run the numbers to see if you are on track.
  • Review Medicare and Social Security options to optimize benefits based on your retirement timeline.
  • Eliminate all consumer debt so you enter retirement with minimal fixed expenses. Consider whether your situation warrants paying off your mortgage or if that would reduce your flexibility in a financial emergency.
  • Discuss your retirement lifestyle goals with your spouse or partner and agree on a shared vision. Will you relocate? Travel? Work part-time?

Your 60s

Your 60s are traditionally when retirement begins. Ensure you have a solid income plan and address healthcare and insurance needs.

  • Sign up for Medicare and Social Security if you haven’t already. Calculate the optimal time for you to start receiving Social Security benefits.
  • Consider downsizing to a smaller home or moving to a lower-cost area if you need to access equity in your home or reduce expenses.
  • Ask your employer about retiree health insurance if it’s offered. Review insurance options to cover potential long-term care costs.
  • Meet with your financial advisor to finalize your retirement income plan. Determine the best order to withdraw from your accounts.
  • Identify any income gaps and adjust spending to ensure you don’t risk running out of money in later retirement years. Be realistic about costs.
  • Discuss estate planning with a qualified attorney.
  • Develop a purposeful retirement lifestyle with hobbies, volunteering, classes, and social activities.

Your 70s (and beyond)

Your 70s and beyond bring new challenges as health, mobility, and mental sharpness may decline. Prioritize safety, security, and enjoying this phase of life.

  • Review and update insurance policies, beneficiaries, wills, trusts, and powers of attorney for finances and healthcare.
  • Ensure a trusted person can access passwords and account information should something happen to you.
  • Review your estate plan and confirm it still reflects your wishes. Update as needed and communicate plans clearly to family members.
  • Analyze retirement account withdrawals and Social Security claiming strategies annually to optimize income and tax efficiency.
  • Declutter your home and important papers to simplify things for your loved ones. Shred unnecessary documents containing personal information.
  • Enjoy this time of life by spending time with family and friends, traveling, and pursuing hobbies. This is what all your planning was for!

At any age, the keys to effective wealth management are budgeting, saving, investing wisely, and adapting your strategies as life situations change. Working with a trusted financial advisor can help you analyze needs, develop a plan, and stay on track.

At Aura Wealth, we are financial advisors and CPAs. We have vast experience helping clients at any phase of their life plan for their future.