Financial Planning Toward Retirement: Steps for Every Decade

“The best time to start planning was yesterday; the next best time is today; tomorrow is not a viable alternative.”

This saying explains the value of proactive planning, especially when identifying your financial goals for retirement. Comprehensive financial planning is critical for sustainable retirements that may last 30 years or more. Lifespans are increasing, families are changing, securities markets fluctuate, and costs continue to increase—in particular, healthcare. Today is a good time to review the key provisions of your current retirement plan. 

Our Buffalo Grove CFP® and financial professionals take a proactive approach to financial planning. Our core purpose is to help you avoid unnecessary risks on your financial journey toward and during retirement. We’re always refining our advice and services, providing sophisticated solutions for complex financial problems.

In today’s blog, we’ll look at financial planning solutions you can use at different ages to prepare yourself for a sustainable retirement without making difficult compromises.

Financial Planning In Your 30s: Laying the Foundation

Your 30s are about creating a strong financial foundation for your retirement years decades in the future. While retirement may feel like a long time away, these years are crucial for establishing savings habits and initiating investment strategies to keep pace with your evolving needs. 

• Build an Emergency Fund: Uncertainty can derail long-term plans if unprepared. A cash reserve—often six months of living expenses—ensures you can cover the unexpected without tapping into your retirement savings.
• Maximize Employer Contributions: Many employers offer retirement plans like 401(k)s with matching contributions. Contributing enough to get the full employer match is like getting free money for your future, and it’s one of the best ways to increase your retirement savings.
• Explore Investment Options: As financial advisors in Buffalo Grove, we recommend diversification of your investments. When you are younger, you should have a higher risk tolerance to allow for a more aggressive portfolio with room to grow over the coming decades.
• Start Building Your Credit: Good credit helps with significant life purchases, like a home, often part of a larger financial plan. Aim to keep your credit score and debt-to-income ratio low, as both will positively impact future financial flexibility.

Listen to our podcast, “Rocking Your Retirement Jersey.”

Financial Planning In Your 40s: Gaining Momentum

Your 40s are about gaining momentum, building a critical mass of retirement assets, and refining your plan for a long, comfortable, secure retirement. This decade is often marked by greater earning potential and increased financial responsibilities:

• Increase contributions to your retirement accounts as income allows. Aim to contribute the maximum to tax-advantaged accounts (401k, IRA) if possible. In your 40s, compounding still has time to work in your favor, so maximize your savings as soon as possible
• A Buffalo Grove financial planner can help you reassess your risk tolerance to ensure your current investment allocation is not exposed to excessive risk. While you may still be in a growth-focused phase of investing, it’s wise to begin adding some increased stability to your portfolio as you get closer to retirement.
• If you have children, this decade may bring higher education expenses. A financial planner can help you weigh these costs against retirement goals and explore options like 529 college savings plans.
• High-interest debt will erode your ability to save. This decade is ideal for tackling debts and positioning yourself for a debt-free retirement.

Be sure to listen to our popular podcast: “Stocks, Stress, and Smiles.”

Financial Planning In Your 50s: Getting Strategic

Your 50s are when retirement planning becomes more strategic. With a comfortable retirement within sight, it’s time to finalize a plan that ensures your goals are achievable:

• Leverage catch-up contributions. Once you turn 50, the IRS allows catch-up contributions for retirement accounts. For example, you can contribute additional funds to IRAs and 401(k)s, increasing your available assets for retirement.
• Health expenses can be a significant financial burden in retirement. Now’s the time to explore Health Savings Accounts (HSAs) or long-term care insurance, which can help cover rapidly rising medical costs later in life.
• The age at which you start claiming Social Security will impact your income planning. A financial planner can help you develop a strategy that aligns with your financial needs and maximizes your monthly benefit.
• Work with a CERTIFIED FINANCIAL PLANNER™ professional in Buffalo Grove to understand how much income you’ll need in retirement. This includes reviewing sources like pensions, Social Security, and savings to determine if your expected income meets your cost of living adjusted for inflation.

Financial Planning In Your 60s and Beyond: Securing Your Retirement

In your 60s +, it’s time to finalize your plan and set the groundwork for a smooth transition from working years into retirement years. In these years, every financial decision is geared toward ensuring that your resources will last for the rest of your life.

• How and when you withdraw funds can greatly impact the longevity of your retirement savings. An experienced fiduciary financial professional in Buffalo Grove can help develop a tax-efficient strategy that considers all retirement accounts and minimizes the tax burden when you take distributions.
• Assuming you are an empty-nester, consider downsizing your home to reduce costs as you enter retirement. Selling a larger home and moving to a more affordable property can free up additional cash for retirement or provide a safety net for unexpected expenses.
• Estate planning is essential in your 60s to ensure your assets are distributed according to your wishes. Review your will, establish any necessary trusts, and work with a financial planner to discuss the most tax-efficient transfer strategies.
• At this stage of your life, your portfolio should balance stability and growth to sustain your assets. While shifting entirely to conservative investments may be tempting, keeping a portion in growth-oriented assets can help combat inflation.

Comprehensive Financial Planning With SGL Financial 

We cover every aspect of your financial life—from income and investments to tax and estate planning—ensuring you have the right strategy for a happy, sustainable retirement. 

Financial planning is more than saving; it’s about creating an adaptable plan aligned with your goals that are subject to change without notice. No matter your age, SGL Financial in Buffalo Grove is ready to help secure your financial future. Reach out to start planning today.