20s and 30s
Learn the money basics
Two books to consider: “How to Think About Money,” by Jonathan Clements, and “Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favor,” by Spencer Jakab.
The Investor Protection Institute’s site, iInvest.org, offers free guides that explain stocks, bonds and mutual funds. You might also consider taking a personal finance course at a community college or checking the online offerings on sites like Coursera.org.
Sketch out your monthly budget
Add up the fundamentals (your rent, utilities, groceries, transportation, student loans and car loans) and subtract from your monthly after-tax pay. Websites like Mint.com and YouNeedABudget.com offer free software to track spending and set up budgets.
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Start saving and investing
Take advantage of your employer’s 401(k) or similar retirement plan. Workers under age 50 can contribute up to $18,000 to their employer-provided 401(k) in 2017. Contributions are tax deductible, and investments grow tax-deferred until withdrawals in retirement.
Invest enough in your 401(k) to qualify for the full match (the amount your employer puts in as a result of your contributions). Most employers require workers to save from 4 percent to 6 percent of pay to get the maximum match. Begin by saving at least 5 percent of your salary and increase the amount by one percentage point every year until you reach 20 percent. Some plans allow participants to schedule automatic increases each year.
Aim for a portfolio of stocks or stock mutual funds. Equities outperform fixed-income investments over time. Investors more than 15 years away from retirement should consider an aggressive portfolio with more than 80 percent allocated to stocks.
Invest in a diverse mix of low-cost index funds. You might select a trio of funds: a broad United States stock market index fund, an international stock market index fund with exposure to both developed and emerging markets, and an index fund that owns the overall United States bond market.
Another option: Target-date funds, or T.D.F.s, which automatically adjust the balance of their stock and fixed-income investments based on your age.
If you earn enough to save on top of your retirement plan but not so much that you are capped by I.R.S. income limitations, contribute to a Roth I.R.A. The adjusted gross income phaseout range for Roth I.R.A. contributions in 2017 is $186,000 to $196,000 for married couples filing jointly and $118,000 to $133,000 for singles and heads of households.
Review your credit report
The three credit bureaus — Experian, TransUnion and Equifax — provide one free report annually. Request one at AnnualCreditReport.com, and check it every year to avoid problems when you need access to credit.
Do not skip health insurance
Currently, you can be insured as a dependent on your parent’s health insurance plan until age 26 — unless you can get insurance through your job. If you cannot piggyback on your parent’s plan and you do not have a job with health insurance, you may need to buy a policy through a health insurance marketplace.
Start an emergency fund
Set aside money to cover unexpected life events and expenses like unreimbursed medical bills and auto or home repairs. Try to save a year’s worth of expenses.
Build a relationship with a financial adviser
Look for a fee-only financial planner designated as a Certified Financial Planner by the nonprofit Certified Financial Planner Board of Standards. The Board of Standards, the National Association of Personal Financial Advisors and the Financial Planning Association all offer searchable databases with the contact information of certified financial planners.
Rebalance your retirement account regularly
Financial advisers typically suggest rebalancing your portfolio whenever the mix of equities and fixed-income investments is more than 7 percent to 10 percent from your original asset allocation.
If you have children or other dependents, consider a term life insurance policy that provides hundreds of thousands of dollars of coverage for minimum premiums over terms of 20 or 30 years, but has no cash value.
Set up a self-employed retirement plan
If you are starting a business, or moving to a nonprofit or a small firm without an employee retirement plan, keep setting aside money in tax-friendly accounts like a SEP-I.R.A., a solo 401(k) or a SIMPLE I.R.A. One of the biggest mistakes entrepreneurs make is not planning adequately — or at all — for their retirement.
Pay down debts
If possible, pay off outstanding high-interest credit card debts, college loans and auto loans.
Make your catch-up contributions
In 2017, workers 50 and older can contribute $6,000 in “catch-up” contributions to their 401(k) or other employer-provided retirement plans.
Review your Social Security and pension benefit options
You can get an estimate of your future Social Security benefits and a record of your lifetime earnings history at socialsecurity.gov. The AARP also has a retirement and a Social Security benefits calculator. These days, many people claim Social Security as soon as they turn 62, the earliest possible age. If you delay claiming Social Security until age 70, you will increase benefits by about 8 percent a year.
Start planning your next act
If you want to start an encore career, keep in mind that money is the biggest stumbling block. That is because starting over in a new field, particularly a philanthropic one, or going the self-employment route, usually comes with a price tag, at least initially. Start planning a few years ahead by saving, adding new skills and downsizing.
Make a move
Investigate the upside of moving to a smaller home, townhouse or condo. Depending on your real estate market, refinancing your mortgage can also lighten your debt load. Figure out how much you can save over time with an online refinancing calculator. Check HSH.com or Bankrate.com for the latest rates and then shop around.
Protect the wealth you have
Review disability, life, personal liability and umbrella insurance. Evaluate long-term care insurance coverage (generally not appropriate before or after mid-50s). Premiums get much larger as you age, and health issues may disqualify you. Update your will and estate planning documents. Watch out for high mutual fund and management fees, which can whittle away at your savings.
60s and Beyond
Get a grip on your retirement income sources
Carefully review your anticipated income (Social Security benefits, pensions, distributions from personal investments and savings) and expenses (weekly, monthly and yearly budgets) at least a year before you stop working.
Take control of fixed monthly costs
Downsize. Consider selling your home and moving to an area with a lower cost of living or to a rental property. This will allow you to save on property taxes, maintenance and insurance costs. Some people who live in high cost-of-living areas might look at relocating to an area with lower taxes and cheaper real estate costs.
Consider working beyond your official retirement age
The longer you work, the longer you can contribute to a defined contribution plan like a 401(k). Working longer might give you access to a health plan, or help you pay for another one until you are eligible for Medicare at 65.
Shift your investments to a more conservative asset mix
You may want to keep about 40 percent of your investments in stocks or stock funds well into retirement.
Plan your withdrawal rates
A conservative annual drawdown of retirement savings may be to take 3 percent the first year, and to adjust for inflation after that. If you have saved $1 million, for example, plan to withdraw $30,000 in the first year and to increase that amount by the rate of inflation in the second year and beyond.