As you move through each decade of life, your spending and savings needs change based on many factors. Your career, family decisions, living preferences, health, hobbies and legacy plans are just a few of the items that affect your financial goals.

Financial planning is critical to achieving your long-term financial plans and can mean different things to different people. Taking a proactive approach to financial planning—starting as early as possible and continuing through every stage of life—positions you for greater success during your accumulation years when your income is highest.

That said, it’s never too late to start the process. The key is to start, and the best time to start is now.

Keep these financial planning and wealth management considerations top of mind as you move through each decade.

Starting out strong in your 20s

In your 20s, you are often just starting to manage your own finances, beginning your career and being exposed to new options like retirement accounts. It’s important to begin budgeting and saving to establish these practices early. It’s also important to identify clear and specific financial goals from the outset so you know what you’re working toward. This should include planning for unexpected life events, including job loss, so you’re as financially prepared as possible.

Here are some key steps to take in your 20s:

  • Identify a financial planner. While it may seem like you’re not quite ready, consider this your entry point into financial planning. It’s important to find a financial professional you trust so you can begin laying the groundwork for your financial future.
  • Consolidate high-interest debt where you can. For student loan payments or any other debts that you’ve acquired with difficult interest rates, it’s worthwhile to evaluate if you can consolidate the debt to one loan. This will usually create one, lower monthly payment and interest rate for you to manage. This route may not work for everyone, so lean on your financial professional for guidance.
  • Contribute to a 401(k) early. Save at least as much as it takes to receive your full employer match. Beyond that, 10 to 15% of your pre-tax income is an ideal goal. For many, this may not be feasible at this stage, so consider the highest percent you’re comfortable with and commit to adding 1-2% annually so you can steadily work toward this goal.
  • Don’t only save for your retirement. Contrary to what you may hear, saving for retirement when you’re young isn’t the only important goal. Saving consistently to establish an emergency fund is just as critical, in addition to saving for significant purchases like buying a home. A good rule of thumb is to have between three and six months of living expenses in your emergency fund.

Big decisions in your 30s

For many in their 30s, the decision to buy a home is top-of-mind, in addition to common life events like marriage and having children. Some also consider pursuing additional degrees or certificates to advance careers or adopting pets and traveling to build out the life they want. Important items to consider include:

  • Begin meeting regularly/annually with your financial planner. As you begin to accumulate assets and consider life events, having strategic conversations with your planner annually can help prepare you for a variety of current and future financial considerations.
  • Don’t be afraid to talk to your children about money. You can start talking with your kids about the concept of spending and saving as young as pre-school. It’s never too early to begin having money management conversations, as their financial education starts with you.
  • If you have dependents, consider buying life insurance. It can be hard to think about this, but it’s critical to establish financial security for your family members should the unthinkable occur. You and your family will appreciate the financial peace of mind life insurance provides.
  • Begin thinking about your will and estate planning needs. Like life insurance, it’s important to begin considering this if you have dependents or are beginning to accumulate financial and material assets. While there is an up-front investment in putting this plan together, it will help protect your assets as they continue to grow and will establish an important framework that can be adjusted as your needs evolve and mature.

Balancing act in your 40s

In your 40s, it is essential to balance saving for major purchases with planning for retirement and meeting the needs of children and, potentially, aging parents. This decade requires thoughtful review and planning to ensure you’re on track to reach your goals, including:

  • Opportunity to review and revamp goals. Items can shift significantly from your 30s to your 40s. Your financial planner can make sure you’re on track with the goals you’ve previously established and can help adjust as needed. This includes discussing when you want to retire and the amount you’ll need to continue living the lifestyle you want. They also understand this is when many people are trying to balance careers, maintain a home, raise children, assist aging parents and still plan for the future—all of which comes with significant financial considerations and obligations.
  • Decide how saving for major purchases balances with your retirement savings. If you have college-bound children, are you going to pay for all or some of their tuition? Do you intend to help fund your children’s weddings? Will your parents need financial assistance as they age? If not planned for, these type of life events can cause financial disruption. To avoid unexpectedly pausing your retirement saving, consistently evaluate your personal circumstances and factor these considerations into your financial plan.
  • Consider ways to boost your income. If you’re looking to increase your income, there are a variety of ways to do this. This may include negotiating a deserved raise, applying for a higher-paid job, or starting a side hustle in your spare time.

All-in on savings and health care planning in your 50s

For many in their 50s, this is the time when they transition to being empty-nesters and see some expenses related to their children decrease. However, if you are still paying for kids in college or have some of those other higher expenses previously mentioned, it is important to not lose sight of retirement goals.

  • Reduce debt and maximize savings opportunities. Consider paying off high-cost debt, such as your mortgage (if you haven’t already) and maximize catch-up contributions to accounts like your 401k, health savings accounts, IRA and more. Even if you’ve steadily saved along the way, taking advantage of increased savings opportunities can significantly add to your retirement savings picture.
  • Purchase long-term care insurance. Most people buy long-term care insurance between ages 50 and 65. Experts note the sweet spot is around age 57. If you wait beyond that, it will be much more expensive.
  • Begin evaluating your ideal Social Security withdrawal age. Carefully begin considering when you want to start receiving Social Security payments. If you choose to receive payments when they first become accessible at age 62, you’ll receive lower checks over a potentially longer period. However, you’re entitled to full benefits when you reach full retirement age, and if you delay taking your benefits until then, your benefit amount will increase, and your monthly checks will be larger.

Right-size your plan in your 60s

For many, the 60s mark the beginning of the retirement transition. This might mean downsizing to a smaller home or moving to be near family. Before you retire, it will also be important to adjust your budget to ensure you are able to fund your lifestyle with just your retirement savings and benefits. Other considerations, include:

  • Evaluate your life insurance policies. You may no longer need life insurance as your dependent and debt situation is likely much different than it was a decade or two earlier. Additionally, review your long-term care insurance policy to see what benefits it includes, and determine if it is a necessary expense.
  • Consider the need for lifetime income. Life expectancy has risen significantly during the past few decades, which makes it that much more important to address future financial needs. A strong mix of savings and accessible investments is vital. Work with your financial planner to do some scenario planning that includes extending financial needs five to 10 years longer than the typical life expectancy.
  • Review your legacy plans. By now, you ideally have a will or estate plan already in place, and you may have already updated it a few times. If you haven’t recently reviewed this, however, your wishes or intentions may have changed. Evaluate your current financial situation, along with how you would like to gift your funds from a legacy perspective, to ensure the wealth you’ve worked hard to accumulate is passed forward in the way you want.

While the path to retirement varies greatly by person, there are steps you can take during each decade of life to help ensure you reach your desired financial state. Starting strong with clear goals in mind and a financial plan to achieve them is the first step.

Read more of Nikki’s thoughts on navigating your financial plan throughout your life in the American City Business Journals‡.

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Disclosures and Important Considerations

UMB Investment Management and UMB Private Wealth Management are divisions within UMB Bank, n.a. (a subsidiary of UMB Financial Corporation) that manage active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals. UMB Financial Services, Inc., Member FINRA, SIPC, offers broker/dealer and investment advisory services to retail and institutional investors and is also a subsidiary of UMB Financial Corporation and is an affiliate of UMB Bank.

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