Financial Checkpoints Managing Life’s Transitions

Things to think about:

In your 20’s

• Fund a Roth IRA
• Develop a budget and follow it
• Enroll in your company’s 401(k) plan and contribute at least the minimum needed to qualify for the full employer match.
• Start an emergency fund with three to six months living expenses.
• Pay down your debt (e.g. credit cards, student loans)
• Check your credit report to ensure there are no discrepancies
• Purchase life insurance and disability income insurance to lock in low rate

In your 30’s

• Work with an attorney to prepare a will and address other possible estate planning issues
• Consider buying additional life insurance if you have started a family.
• Evaluate your investment portfolio to ensure it is properly diversified
• Create an education funding plan if you have children
• Increase contributions to your retirement account(s) following raises
• Aim to make a down payment of 20 percent when buying a home to avoid the cost of mortgage insurance.

In your 40’s

• Develop specific retirement savings goals
• Check that the names of beneficiaries/heirs listed on your will, life insurance, financial accounts, and retirement accounts are up to date
• Assess how your 401(k) plan and IRA assets are invested as your investment objectives may have changed
• Review life insurance policies to ensure adequate coverage
• Evaluate your education funding plan based on expected college costs

In your 50’s

• Evaluate your sources of retirement income, how much to expect from each source, and when to expect it
• Max out your retirement contributions in your employer-sponsored retirement account, and if applicable, your Roth or traditional IRA
• Revisit retirement savings goals to ensure they still make sense
• Check that your estate plan is up to date with personal changes and current laws
• Confirm that executors and guardians are still properly chosen
• Consider contributing to a Health Savings Account (HAS) to save for current and future health care costs
• Invest HAS contributions that are not spent each year to help pay for healthcare in retirement

In your 60’s

• Decide when you are going to start withdrawing from your retirement accounts
• Consider rolling over your 401(k) balance into an IRA at retirement to retain tax benefits
• Review when you can receive your full Social Security benefit
• Identify your source of health insurance during retirement and what coverage is provided
• Pay off your mortgage and consumer debt, if applicable

In your 70’s

• Determine how you would like to be remembered in the form of bequests or gifts to charity
• Begin taking withdrawals from your traditional IRA by age 70 ½ in order to avoid a large tax penalty
• Consider downsizing to a smaller home to help reduce property taxes, utility costs, and other expenses
• Plan for future health care costs by purchasing health benefits from previous employer or a supplemental Medigap policy
• In the event of a spouse’s death:  Work with your attorney to update your will, living will, and powers of attorney to reflect your new circumstances