How to think about retirement, whether you're in your 20s or 60s
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Preparing for retirement is like climbing a mountain. The ascent is fraught with challenges as you scavenge to earn and save money, as much money as possible along the way. The peak, unsurprisingly, is your retirement date — the moment you’ve been working toward. However, once you reach the top of the mountain, you still have to walk your way down, and safely. This is one area many people often overlook.

Saving for retirement is one thing, but ensuring you’ve saved enough to produce income to last through retirement is another. Many individuals see retirement as the finish line, when really it’s just the beginning to the next phase of your life.


In order to get safely down the mountain, maintaining saving habits and setting spending rules are paramount to success. While every individual is different, below are a few rules to follow throughout each decade of your life.


20s: The foundation

This is the time to set the financial foundation for the rest of your life. Create savings habits by setting strict rules for yourself. No matter what your level of income, recommend folks in this age range abide by the 70/20/10 rule — don’t spend more than 70 percent of your income on living expenses, save 20 percent for retirement, and save the remaining 10 percent to build an emergency fund for extraordinary items and to cover at least six months of daily expenses.

Should you lose your job, have to fix your car or pay for an unforeseen medical expense, you won’t be left high and dry if you have some liquidity lying around. Setting the foundation for saving a defined portion of your income at this stage in your life will pay dividends decades down the road.

30s: The danger zone

I often find that the urge to “keep up with the Joneses” is never stronger than during this decade of life. Some people in your life may be earning more than you and potentially making large purchases. While buying a home or new car may still fit within your means, it’s important not to overreach when it comes to big purchases. Maintain the 70/20/10 rule, and make sure your mortgage and car payments do not exceed 70 percent of your net income.

This decade of life is also the time to review protection products as your immediate family begins to grow. Disability insurance and life insurance go a long way to protect loved ones should an unexpected event prevent you from working. At this point in your life, you’re also likely still healthy and financially strong, so these policies will be less expensive now than in the future.

40s: The peak period

For most people, your 40s are when earnings and expenses will be at their highest. According to a survey of 200 million Americans from the New York Federal Reserve, incomes tend to peak for people between the ages of 40 and 50. But on the other hand, children might be entering college, you may be paying a mortgage, or perhaps you are looking for additional vehicles for any teenagers in your family.

While individuals must reevaluate their financial plan every year, this decade is a good time to take a deeper dive into your personal finances to make sure you are still on the right track. We recommend scheduling a few additional meetings with your financial adviser to conduct this analysis and ensure no glaring mistakes are going unnoticed.

50s: The heavy lifting

At this point in many people’s lives, their children are out of college, their mortgage is paid off, and other major expenses are no longer a part of their financial picture. This scenario presents an opportunity to kick your retirement savings contributions into hyper drive. For those that fell behind on savings goals in earlier years, now is the time to play catch-up. Don’t rule out cutting back your standard of living in order to dedicate even more of your finances to retirement readiness. If there are any warts in your credit history, like credit card debt or other high-interest loans, eradicate them immediately.

With the peak of the mountain in sight, it’s also time to begin planning the specifics of your retirement. When is your targeted retirement date? What standard of living will you allow yourself to enjoy? How much income will you need to sustain this lifestyle, and for how long? What will you spend your time doing so that you’ll be fulfilled? Consult with your loved ones and financial adviser on all of these important questions before developing a plan.

60s: The home stretch

If you’ve remained disciplined and followed the financial plan your adviser laid out for you, hopefully, there are only a few years left before retirement. However, people are living longer and are still productive at work late into their 60s. Don’t be discouraged if you haven’t reached your financial goals at this point. There is still time left to earn and save as much as you can.

No matter where you are in the process today, it’s not too late to begin planning for financial independence. By maintaining healthy saving habits and sticking to a financial plan, anyone can retire and begin the journey down the mountain.


David LaBricciosa, CPA, is managing partner at Penn Mutual’s Aspire Wealth Planners.

The views expressed by contributors are their own and are not the views of The Hill.