Your financial plan should grow with you. What matters most in your 20s isn’t what you’ll care about in your 50s. The way you manage your money should evolve with each life stage, reflecting new priorities, responsibilities, and goals along the way.
Whether you’re paying off student loans, saving for your child’s college fund, or figuring out how to make your retirement income last, financial planning is an ongoing process. And the earlier you start thinking ahead, the easier it becomes to build, protect, and enjoy your wealth over time.
In this guide, we’ll walk you through five key life stages and show you what financial steps to take at each one. You’ll get practical advice for where you are right now, and where you’re headed next. Not sure where to start with your financial plan? Our CPA advisors will help you build one that makes sense for your goals.
TALK TO A CPA INVESTMENT ADVISOR
Stage 1: Young Adulthood (18–30)
In this stage, you’re likely finishing school, building a career, or navigating life on your own for the first time. You’re earning your own income and figuring out how to manage it. This is where wealth accumulation begins. The habits you build now will either support or strain your future self, so this is the time to get intentional.
1. Create your first real budget.
Use a budgeting app or spreadsheet to track where your money’s going. Focus on needs first, wants second. Even a basic 50/30/20 rule (50% needs, 30% wants, 20% savings/debt) is a great place to start.
2. Build your emergency fund.
Start with at least $1,000, then aim for 3–6 months of living expenses. Keep it in a separate high-yield savings account so it’s easy to access but harder to spend.
3. Open a Roth IRA and start investing early.
Even small contributions grow over time thanks to compound interest. If you invest $200/month starting at age 25, earning an average 7% return, by the time you’re 65, you’ll have around $525,000. But if you wait just 10 years and start at 35, you’ll only have about $245,000 by age 65. That’s less than half, even though you only skipped 10 years of contributions.
If your employer offers a 401(k) with a match, take full advantage of it. That’s free money. Contribute at least enough to get the full match, then consider contributing to a Roth IRA if you qualify. Roth IRAs grow tax-free, and withdrawals in retirement are also tax-free, making them especially valuable when you’re in a lower tax bracket now.
4. Start building credit the right way.
Open one credit card, use it for a few recurring expenses, and pay it off in full every month. Avoid late payments and high balances. Good credit helps you qualify for better interest rates on loans, housing, and even insurance.
5. Tackle student loans strategically.
Choose a repayment plan that matches your income. Consider consolidating or refinancing (if it makes sense for your interest rates and loan types). And set up auto-pay to avoid late fees and possibly lower your interest rate.
6. Invest in yourself.
Whether it’s a trade, certification, or side hustle, prioritize education that builds profitable skills. A four-year degree isn’t the only path to financial stability, and debt without ROI can slow your long-term progress. As Warren Buffett says, the best way to beat inflation is to be exceptionally good at something.
Stage 2: Starting a Family (30–45)
This stage often comes with big transitions: marriage, children, buying a home, or caring for aging parents. Your income may be higher, but your expenses likely are too. The key now is to build financial stability while preparing for the long-term needs of your household.
1. Build a strong financial safety net.
If you haven’t already, grow your emergency fund to cover 3–6 months of essential expenses. With a family, unexpected events, including medical bills, job changes, and car repairs, can have bigger consequences
.
2. Get the right insurance in place.
As your responsibilities grow, so does the need to protect your income and your family. A term life policy that covers 20 to 30 years is usually the most affordable and effective option. Disability insurance is just as important since you’re more likely to face an injury or illness than die before retirement. Make sure your health, auto, and home or renters insurance are up to date and provide enough coverage. Insurance doesn’t just protect you; it protects everyone who depends on you.
3. Start (or increase) college savings.
Open a 529 college savings plan if you plan to help fund your children’s education. Even small monthly contributions add up and grow tax-free when used for qualified education expenses. Some states offer a tax deduction for 529 contributions. Check yours.
4. Maximize retirement savings.
You might be juggling competing priorities, but retirement comes first. Your kids can borrow for college, but you can’t borrow for retirement. Contribute consistently to your 401(k) (aim for 10–15% of income if possible). If eligible, contribute to a Roth IRA for tax-free growth and flexibility.
5. Create or update your estate plan.
If you have children or dependents, you need:
- A will (to name a guardian)
- A power of attorney (for financial decisions)
- A healthcare directive (for medical decisions)
- Updated beneficiaries on all accounts and insurance policies
This stage is about stability, protection, and intentional growth. The financial decisions you make now will shape your family’s future, not just yours.
Stage 3: Mid-Career (45–55)
These are often your peak earning years—but also some of your most financially complex. You may be saving for college, helping aging parents, paying down debt, or getting serious about retirement. This is a crucial time to protect your progress, fine-tune your goals, and plan deliberately for what’s next.
1. Max out your retirement contributions.
If you’re 50 or older, take advantage of catch-up contributions. For 2025, that means up to $30,500 in a 401(k) and $8,000 in an IRA. If you’re behind, now is the time to close the gap. Make retirement savings a fixed line in your budget, not just a leftover.
2. Rebalance your investments.
You’re closer to retirement, but you still need growth. Revisit your asset allocation at least once a year. Too much risk can expose you to big losses; too little can limit your long-term returns. If you’re unsure, consider a target-date fund or meet with an investment advisor to recalibrate.
3. Evaluate long-term care insurance.
Premiums are lower and options are broader if you buy in your 40s or early 50s. It’s not for everyone, but it’s worth exploring, especially if you want to avoid being a financial burden to your children later in life.
4. Check your estate plan and beneficiaries.
If you’ve had changes in your family (divorce, remarriage, adult kids), update your will, power of attorney, healthcare directive, and all named beneficiaries. Outdated documents can cause costly problems later.
5. Talk about money with your parents and kids.
This is the sandwich generation sweet spot. You may be supporting both ends: teens on one side, aging parents on the other. Start honest conversations now about college costs, elder care, and estate planning. Clear expectations reduce financial surprises.
Stage 4: Pre-Retirement (55–64)
Retirement isn’t a someday concept anymore—it’s on the horizon. This is your window to fix gaps, cut risk, and get serious about how you’ll live when the paychecks stop. You’re not coasting into retirement. You’re planning for it.
1. Know your retirement income number.
Figure out how much you’ll actually need to live on each month. Start with your current expenses, then adjust for lifestyle changes. Will you travel more? Downsize? A common rule is replacing 70–80% of your income, but don’t guess. Run the math.
2. Build a withdrawal strategy.
A common starting point is the 4% rule. Withdraw 4% of your retirement savings in the first year, then adjust for inflation each year after. It’s designed to make your money last around 30 years. But that’s a rule of thumb, not a rulebook.
Your plan might look different depending on your savings, lifestyle, taxes, and other income sources. Some people withdraw less early on to delay Social Security or cover healthcare. Others draw more in the first few years and taper down later.
3. Time your Social Security.
Start at 62 and get a smaller check. Wait until 67–70 and lock in a bigger one for life. If you’re healthy and have other income, delaying can add tens of thousands over time.
4. Adjust your investments.
Now’s the time to reduce risk; not eliminate it. Shift toward income-generating or lower-volatility assets, but don’t go too conservative too fast. You may need this money to last 25+ years.
5. Clean up your financial house.
- Pay off any high-interest debt.
- Review or update your estate plan.
- Make sure all account beneficiaries are current.
- Evaluate long-term care options before premiums jump.
- Consider downsizing or simplifying your expenses.
Stage 5: Retirement (65+)
Once you turn 73 (based on current IRS rules), you’re required to take annual withdrawals from most retirement accounts, including 401(k)s and traditional IRAs. Miss it, and you could face a steep penalty.
1. Start Required Minimum Distributions (RMDs).
Once you turn 73 (based on current IRS rules), you’re required to take annual withdrawals from most retirement accounts, including 401(k)s and traditional IRAs. Miss it, and you could face a steep penalty. If you aren’t using all your RMD, consider a Qualified Charitable Distribution (QCD) to give tax-efficiently.
2. Stick to a withdrawal strategy.
If you started with the 4% rule in pre-retirement, now’s the time to adjust based on real-world needs. Track your spending, account for healthcare costs, and be ready to pivot if markets dip or inflation rises.
3. Revisit your investment mix.
You still need growth, but preservation is priority one. Maintain a balanced portfolio with enough liquidity to cover a few years of expenses, so you’re not forced to sell during a downturn.
4. Simplify your financial life.
Consolidate accounts. Set up direct deposits for RMDs or annuity payments. Automate bills. Make it easier for you and your spouse or heirs to manage things if needed.
5. Update your estate plan (again).
Make sure your will, trusts, powers of attorney, healthcare directives, and beneficiaries are all current. Consider whether your plan still reflects your legacy goals, especially if grandchildren or charitable causes are in the picture.
Start Your Financial Plan Today.
Your financial needs will change because life changes. At Griffiths, Dreher & Evans, PS, CPAs, we help you manage, build, and protect your wealth at every life stage. If you’re ready to create a plan that grows with you, talk to one of our CPA Registered Investment Advisors to get expert and personalized financial planning advice*.
TALK TO A CPA INVESTMENT ADVISOR*DISCLAIMER: Investment advisory services are provided by Griffiths, Dreher & Evans, PS, CPAs, a registered investment adviser. Past performance does not guarantee future results. Planning outcomes depend on individual circumstances.