A Financial Planning Checklist, From Age 20 to 70 and Beyond

Here is a look at financial planning priorities through the decades of your clients’ lives, from their 20s to their 70s and beyond.

Clients in Their 20s

For most people, this is likely their first decade of working full time. College or other higher education is behind them. Some key planning priorities for this decade should include:

• Get started and contribute as much as possible to their 401(k) or other workplace retirement plans. The miracle of compound growth is never more on an investor’s side than during this period.
• Establish a budget for their spending.
• Formulate a plan to pay down any student loan or excess credit card debt.
• Be sure to enroll in health insurance and consider disability insurance.

Clients in Their 30s

This is a decade often framed by moving ahead careerwise, starting and growing a family and in many cases buying a first home. For those graduating from professional schools like law or medical school, this might be the decade where they start their careers in these areas. Planning priorities for this decade might include:

• Create a will and buy life insurance as needed.
• Increasing their savings rate. Investors in this age range should be putting as much as possible away for retirement. This can coincide with increased earnings as they advance in their careers.
• Continue to reduce student loans and any other lingering debt obligations.
• Accumulate a down payment and purchase a home.
• Begin saving for their children’s college education.

Clients in Their 40s

This is a life stage where many people are established in their careers. Children will be getting older, with some of them off to college. This is a time where clients should be seriously thinking about long-term goals like retirement. Planning priorities for this decade might include:

• Make retirement planning a priority. Max out contributions to a 401(k) or similar retirement plan. Invest elsewhere as well to the extent possible for retirement.
• Increase insurance coverage. This is not only life insurance but also personal liability coverages like an umbrella policy. Be sure to have adequate disability coverage as well.
• Get serious about their overall financial picture, including estate planning.
• Work out the details of paying for children’s college.
• Pay down their mortgage if possible.

Clients in Their 50s

This is the home stretch toward retirement for many. Investors should continue on the financial planning and investing path they ideally started in their 40s. This is the time period where retirement planning should be refined and where investors should start thinking seriously about their retirement timetable. Planning priorities for this decade might include:

• Get specific as far as retirement planning. What will their retirement lifestyle look like? What sources of income will be available in retirement? Will they retire all at once or ease into it? Formulate a preliminary retirement income plan.
• Continue to max out retirement savings and take full advantage of catch-up contribution opportunities. Consider a health savings account if they have access to one.
• Be sure their estate planning reflects their current and projected needs. Business owners need to have an exit strategy in place.
• Discuss finances with children and parents as applicable.
• Get a handle on any old 401(k) plans.
• Check Social Security earnings statements to be sure that all career earnings are captured. 

Clients in Their 60s

This is the decade where retirement happens for most people. Some may retire in full, while others may continue to work on a full- or part-time basis. This is a decade where some people may downsize their residence and perhaps relocate. Planning priorities for this decade might include:

• Decide when to claim Social Security benefits.
• Review Medicare options and claim at 65 or older if covered by an employer’s health plan.
• Formulate a more concrete retirement income strategy including which accounts to tap and when.
• Look at their tax situation as they enter retirement to ensure that withdrawals are done in the most tax-efficient way.
• Look at long-term care options.
• Update and revise their will and estate planning as needed. 

Clients in Their 70s and Beyond

Most people will be retired during this period. Planning priorities might include:

• Prepare to take required minimum distributions each year, starting at age 73.
• Review Medicare options annually and make changes during the open enrollment period as needed.
• Review and update their estate planning as needed, especially in the event of the death of a spouse.
• Determine where they might live in the event that they need to move into some sort of care facility.
• Discuss their situation with children or parents as applicable.

How Much to Save for Retirement, by Age

A number of experts have weighed in on the amount that people should have saved for retirement at various stages. T. Rowe Price has established these benchmarks.

• Age 30 – an amount equal to 50% of their current salary
• Age 35 – an amount equal to 1 to 1.5 times their current salary
• Age 40 – an amount equal to 1.5 times to 2.5 times their current salary
• Age 45 – an amount equal to 2.5 times to 4 times their current salary
• Age 50 – an amount equal to 3 to 5.5 times their current salary
• Age 55 – an amount equal to 4.5 times to 8 times their current salary
• Age 60 – an amount equal to 6 times to 11 times their current salary
• Age 65 – an amount equal to 7 times to 13.5 times their current salary.

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