Early career
Ages 20 to 30
When you’re settling into your first real job, you’ll likely have a pile of financial paperwork to fill out from your employer. While it may feel overwhelming, be sure to pay close attention to how much you’ll receive after taxes are taken from your paycheck, which healthcare option (if any) is best for your situation, and if you have access to a retirement savings plan. Understanding how these key items fit into your personal situation will help you identify how and where to spend your money.
Here are some important ways others like you have gotten off to a strong start financially:
- Establish your short-, mid- and long-term financial goals. That could be as simple as working to build up emergency savings or to pay down student loans. Once you’ve identified those goals, you can work with a financial professional to determine how to reach them.
- Begin building emergency savings. Having three to six months’ worth of expenses in liquid assets, whether in a high-yield savings account or a separate bank account, can help you avoid taking on debt.
- Aim to pay down any substantial credit card debt, and avoid putting significant expenses on your cards (your emergency fund can help there).
- Assess your student loan debt, and determine how to begin repaying that money.
- Determine your goals for homeownership. If you plan to buy a home or other property, begin saving for a down payment while considering homeownership expenses such as insurance, property taxes and repairs.
Maybe most importantly, begin saving for retirement. When you’re in your 20s, it’s hard to envision a time when you may not have to work. Although it seems many years away, consider making retirement savings a priority. According to the Centers for Disease Control, women have an average life expectancy of 79,3 and with the average woman retiring at 62,4 there could be many years of retirement to fund.
Starting early can make a big difference
Consider the hypothetical information below, and then answer this question:
Who will have more money at age 65, Eloise or Jane?
Here is the investor profile for Eloise
- Starts investing $5,000 a year at age 25
- Earns 8% interest
- Stops investing after 10 years at age 35
- Total investment: $50,000
Here is the investor profile for Jane
- Starts investing $5,000 a year at age 35
- Earns 8% interest
- Stops investing after 30 years at age 65
- Total investment: $150,000
Chances are, you answered that Jane would have more money at age 65. But believe it or not, Eloise will have $787,100 at age 65, while Jane will have $611,730 at that age. That’s roughly $175,000 more for Eloise.5
How? The power of compounding. This example shows the time value of money – simply, how the earlier you begin to save, the more time you allow compounding to do its job.
So even though Eloise invested only one-third of the amount of Jane, beginning 10 years earlier made all the difference.
Mid-career
Ages 30 to 45
Once you enter your 30s and become more financially established, you’ll want to adjust your goals for your life stage. First, review how your financial plan and needs have changed since your 20s. At this stage, you may have children or you’re planning for a family. If you’re taking time off to raise children, planning becomes even more critical. Determine how your family will account for the loss of your income and when and how you’ll re-enter the workforce. You may be upgrading your home size or the car you drive, or just generally paying for all the extra expenses that come with kids and home improvement projects.
Others at this stage have made smart moves like:
- Update goals to reflect your period of life and the goals of your family.
- Consider a life insurance policy, particularly if you have dependents or significant debt. Term life insurance may be an affordable option to help preserve your family’s income and future goals.
- Start a college fund if you have children. College costs continue to rise, so putting money away now gives it time to compound over the years. Consider a 529 plan, which is a college savings plan that offers key benefits, such as tax-free growth and potential tax breaks.
- Continue to save for retirement. Look to consistently increase how much you’re saving, particularly when you get a raise or take a new job with a bigger salary.
- Consider options for obtaining disability insurance, which provides replacement income if your health ever prevents you from working. You can often secure this coverage through your workplace benefits package or from an insurance firm.
Late career
Ages 45 to 55
For many in this age bracket, retirement goes from a long-term goal to something on the horizon. The final 10 to 20 years until retirement age give you ample time to build savings, but there are moves you can make to help ensure you hit your goals. Concern about having enough money in retirement is common: According to research from Corebridge Financial and the Longevity Project, more than half of respondents (55%) said they are extremely or very concerned about running out of money later in life.6
After you reach age 50, you can catch up on retirement savings through higher contribution limits for workplace and personal retirement plans. In 2024, savers 50 and over can set aside an extra $7,500 into a 401(k) plan, for total savings of $30,500. In IRA plans, the catch up amount is now $1,000, for a total of $8,000. Are you already saving the maximum in your workplace plan? Look to supplement your nest egg through savings and investment solutions such as a Traditional or Roth IRA.
- Begin considering what your tax situation will be in retirement. Work with your financial and tax advisers to identify tax-savvy opportunities. These professionals are good resources for evaluating your tax liabilities and identifying ways to reduce your future tax burden.
Pre-retirement
50s to early 60s
As you move through your 50s, the time horizon for retirement shrinks, making savings an even greater priority.
- Take advantage of new opportunities to increase savings as retirement nears. Starting in 2025, those in the 60- to 63-year-old age group can contribute more to their workplace retirement plans through new catch-up contributions under the federal retirement legislation Secure Act 2.0.7
- Make a plan now to cover health care expenses in later years. If covered under a high-deductible health plan, explore the benefits of Health Savings Accounts (HSAs) to save and pay for qualified medical expenses.8 HSA contributions are tax-deductible, and withdrawals may be tax-free. Earnings from interest and investment gains are also tax-free.
Early 60s to retirement age
Early 60s to 65
With retirement right around the corner, this is the time of life to consider putting your financial and personal affairs in order. That includes drafting an up-to-date will and considering a living will and health care power of attorney, which specify your desires around medical treatment. As you consider the possibility of leaving your hard-earned assets to the next generation, it may make sense to meet with a financial professional to discuss establishing a trust so your heirs avoid probate and potentially face lower estate taxes.
Many women will need long-term care help in later years. Research shows that a 65-year-old has nearly a 70% chance of needing some long-term care services at some point.9 To manage the costs, consider long-term care insurance or life insurance with a chronic care rider, which allows you to access your policy’s death benefit if you become chronically ill.
Retirement
Ages 65 and up
As you enter retirement, your focus should shift from saving to generating the income you will live on. Again, meeting with a financial professional can help you take inventory of your retirement accounts and income needs for essential expenses, walk you through guaranteed lifetime income solutions, and craft a plan for when you and a spouse should begin taking Social Security benefits.
For example, if you start collecting early - prior to your full retirement age - and you were born in 1960 or later, benefits will be reduced by up to 30%.10 If you wait and start collecting after full retirement age and you were born in 1960 or later, benefits will be increased by up to 24%.11
This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.
- https://crbgdoc.jaggedpeak.com/getDocument/?email=defalt@crbg.com&Source=default&catalogID=M5787CBR
- https://crbgdoc.jaggedpeak.com/getDocument/?email=defalt@crbg.com&Source=default&catalogID=M5787CBR
- https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm
- https://www.forbes.com/advisor/retirement/average-retirement-age/
- https://www.stlouisfed.org/open-vault/2018/september/how-compound-interest-works
- Funding longer lives (corebridgefinancial.com)
- https://www.forbes.com/advisor/retirement/secure-act-2/
- https://www.irs.gov
- https://acl.gov/ltc/basic-needs/how-much-care-will-you-need
- Percentage reduction varies depending on your year of birth and Full Retirement Age. See table above for details. The reduction is 5 by 9 of one percent for each month before your Full Retirement Age, up to 36 months. If the number of months exceeds 36, then the benefit is reduced 5 by 12of one percent per month in excess of 36. If you wait and start collecting after full retirement age and you were born in 1960 or later, benefits will be increased by up to 24%.
- If you were born in 1943 or later, the delayed retirement credit is 8% each year.