Money doesn’t really age: It’s never too late to make smart financial decisions.
But there are certain times in your life that are prime for specific money moves, times when making the right choice will set your future self up for success.
Below, the best financial moves to make by decade.
In your 20s: Lay a foundation
You’ll probably enter and exit these years at two completely different life stages: Many people come into their 20s in college and cross the bridge to 30 with a decent, if short, career history.
The good news: You have time to recover from bad decisions. The bad news: Any unwise habits you form now could stick with you.
“This is the best time to make saving money a priority and the best time to avoid some pitfalls like getting into a lot of credit card debt,” says Ted Schumann II, managing partner of independent registered investment advisory firm The DBS Companies.
There’s one way to do both, and it’s creating a reasonable budget that aligns with your priorities and includes at least some allocation toward savings, even if it it’s a small one. That money should go toward building a small emergency cushion and into an employer retirement plan that matches your contributions — like a 401(k) — if you have one. If not, open an individual retirement account. (We have a full guide to IRAs here.)
In your 30s: Hit your savings goals
These might be your best investing years, so it pays — quite literally — to use them wisely.
While previously you may have been scraping bits together, now it’s time to get focused. The goal: saving 15% of your income for retirement.
The first two decades of “adulthood” are so important because time is the single biggest asset you have when it comes to growing your money (aside, of course, from money itself). Investing early gives your money time to grow through compound interest.
This is also when you might find yourself juggling other goals. That budgeting habit you formed in your 20s will pay off: A budget based on your values will help you prioritize when financial goals and responsibilities start to pile up.
“Early on, you’re taking time to think through what is more or less important,” says Stuart Ritter, a senior financial planner with brokerage firm T. Rowe Price. “Maybe you’re saving for a big house but you’ll drive an older car, or you want to take vacations but you’re OK living in a smaller house.”
In your 40s: Take stock of where you stand
If you’ve been consistently saving for the better part of two decades, you probably have a nice pile of money. If you haven’t yet figured out how far that money will get you in retirement, now’s the time to do so.
A retirement calculator will give you a good idea of your savings progress, and tell you whether you need to ramp things up, keep cruising along or even — in some rare cases — dial back.
If you’ve been consistently stashing away 15% of your income, you might find you’re in a good spot to shift extra dollars to other goals, for example, college savings if you have kids.
You might also have various retirement accounts. It may be worth bringing old 401(k)s together under one roof, says Ritter. “If you’ve changed jobs a couple times, you don’t want to leave a pot of money somewhere that you’ve forgotten about.”
You can do that by transferring old balances directly into a rollover IRA.
In your 50s: Catch up while you can
The IRS knows that many people are behind in saving for retirement, and so it throws out a bone for people this age: The contribution limits for tax-advantaged retirement accounts like 401(k)s and IRAs increase for those over 50.
These catch-up contributions allow you to put an extra $6,000 into a 401(k) and an extra $1,000 into an IRA every year. That brings the contribution limits for these accounts to $25,000 for a 401(k) and $7,000 for an IRA in 2019.
“If someone is fully funding retirement accounts and they have the income to do so, using the catch-up contribution at age 50 is a great way to supercharge savings into the homestretch of their career,” says Schumann.
In your 60s: Shift your focus
Many people retire in their 60s. According to analytics firm Gallup, nonretired Americans expect to retire at age 66.
That means it’s time to make some concrete plans. What was once a very vague goal starts to come into focus. When will you stop working? Do you plan to quit altogether or shift to part-time? Many retirement experts say your mental and financial well-being will benefit from the latter, if your health allows it.
You’ll also want to make an income plan for retirement, figuring out how much money you’ll receive from Social Security and how much you’ll need to draw out of retirement accounts. Keep in mind that your Social Security checks will be higher for each year you delay taking benefits after you reach retirement age — increasing by as much as 8% annually — until you turn 70.
Finally, many people falsely assume that they should shift their investments into cash or fixed-income on their retirement date. While you might want to move a small portion of your portfolio to safer, more liquid havens, you need your money to grow through retirement. Some financial planners recommend keeping half of your money in equity investments through retirement.
An earlier version of this article misstated the IRA contribution limit for those 50 and older. The 2019 limit, including catchup contributions, is $7,000.