Financial planning is important at every stage of life and age – for success.
We know.
We’ve realized our own Financial Independence dreams and at Cashflows & Portfolios, via our low-cost services here, we also see great financial success in many of our clients who have taken many financial matters into their own hands too.
The specifics of your personal financial plan and retirement income plan could be VERY different from someone else – in fact – it probably should be! Personal finance is personal.
For today’s post, we wanted to provide a primer, a checklist of sorts that shares some valuable financial planning milestones to consider in every decade.
Financial Planning by the Decade: A Primer
In 2026, maybe you want to retire like we have done. :)
Maybe you want to keep working albeit only part-time.
Maybe you want to travel the globe and live as a digital nomad for a little while. We know folks that are doing that!
These things can your lifestyle dreams in your 30s, in your 60s, or any decade in between.
Unfortunately, some Canadians are just not ready to retire.
So, to help you out in every decade here’s our list of key financial priorities to consider.
In your 20s: Setting the Foundation
They say habits die hard and that can apply to good habits too. Based on our own experiences, we believe your 20s are an optimal time to get the personal financial basics right – ingrain good habits. These can include but are not limited to:
- Establishing/earning a consistent income stream to cover expenses.
- Building and living within a budget; managing your cashflow.
- Learning how to eliminate debt; focusing on eliminating consumer debt like credit cards or loans.
- Establishing a small, savings emergency fund.
- Learn about the power of the Tax-Free Savings Account (TFSA) and contribute to it as much as you can.
- Learn about the power of the (Tax-Free) First Home Savings Account (FHSA) and contribute to that account as much as you can.
- Set up basic insurance coverage; including term life insurance to cover any liabilities should a catastrophic loss/premature death occur.
- Write a simple will, especially if you have dependents.
Your 20s retirement planning goal: Once you determine 1. your debt liabilities are manageable; consumer debt is being paid off consistently and 2. after your emergency fund is established, we believe based on our experiences you should strive to set-aside upwards of 10% of your net pay for long-term investments. If you have to start with less, all good. Just start.
In your 30s: Growing the Gap
If your 20s were about setting the financial foundation for your long-term financial success, then your 30s should be about growing the gap between income earned and expenses paid. Consider the following as your career becomes more established or changes are pursued to earn more income:
- Maintain and/or ideally grow your income stream(s) higher with age to cover expenses.
- Continue to hammer-down debt; with consumer debt gone potentially you’re working on your mortgage now after using the FHSA to help fund buying your first home. If you are renting/decide to rent, you are growing the gap between income earned and expenses to invest further.
- Maintain any savings emergency fund; divert more income earned to long-term investments.
- Keep investing inside your TFSA for the long-run.
- Consider investing inside your Registered Retirement Savings Plan (RRSP) as your income/earnings grow to reduce taxation today and grow assets tax-deferred with time.
- Expand your insurance coverage, including disability insurance, as needs or dependants change.
- Re-evaluate your skills and your goals.
- Establish relevant Registered Education Savings Plans (RESPs), for any children, if there is enough cashflow to go around.
Your 30s retirement planning goal: As debt obligations become more predictable and more manageable, consider firming up your savings for investment purposes: focus on maxing on trying to max out contribution room in any registered accounts like TFSAs or RRSPs or RESPs (for kids). Again, automate at least 10% of your net income for investing if not yet done.
In your 40s: Balancing Priorities
If your 30s were primiarly about higher income beyond those earnings in your 20s; furthering your career, then your 40s are likely about balancing all these priorities you’ve established. Consider the following as you juggle multiple priorities and go easy on yourself in the process!
- Re-evaluate your skills, your goals, your wishlists.
- Seek professional help, financial mentors or other expert support that can help you realize your goals including early retirement or semi-retirement or anything else you desire. Find free blogs, podcasts, webinars and low-cost services to support you.
- With emergency funds and other near-term savings now in place, accelerate savings for investment purposes; optimize your RRSP contributions where that makes sense.
- Continue to kill debt, get rid of the mortgage anchor by the end of this decade if you can. If not, set a target in the next decade to kill all debt including mortgage debt using any retirement income projections reports or related forecasting tools.
- Review, assess and evaluate any insurance coverage for the coming decade even as debt obligations dwindle – term insurance remains an inexpensive option in your 40s vs. later in life.
- Maximize savings to any child’s Registered Education Savings Plan (RESP) as much as possible before they embark on higher learning.
Your 40s retirement planning goal: Finishing off debt obligations while accelerating savings (TFSAs, RRSPs, RESPs) is a delicate balance – so go easy on yourself and do what you can. If you really have to choose, debt payments vs. savings for retirement, we believe killing debt aggressively is likely the best guaranteed rate of return you can make in your 40s to set yourself up in your 50s and 60s. Continue maxing out TFSAs or RRSPs (or both) in your 40s. Continue contributing to RESPs (for your kids) if you can. Don’t focus on any non-registered investments unless all registered accounts are maxed out first.
In your 50s: Transitioning
By your early 50s, your mind might start to wander more…thinking about scaling back work for an improved life-work balance, or what it would be like to change jobs/earn higher income for a few more years as a final push towards saving for retirement. This decade might be more about transitioning than anything else: your career, kids (finally?!) leaving the house, and more. Consider the following activities as part of this phase and any transition work that applies for the years ahead:
- Maintain or update your professional networks, actively engage with others for any help and support related to your personal finances established in the last decade; re-evaluate your goals and spending objectives more frequently related to early retirement or semi-retirement or any other life-work balance you might desire.
- Set some final savings and investing targets for all registered accounts (TFSAs, RRSPs).
- If possible, consider investing inside taxable accounts after all registered accounts are maxed out of contribution room.
- Support children using/spending their Registered Education Savings Plan (RESP) assets, if not already tapped.
- Make any final adjustments to your insurance coverage, including disability insurance, as dependants who used to live your household, may change and leave to embark on their own lives…
- Check in on your portfolio asset mix and risk tolerance, diversify more for the coming decade if necessary including a cash wedge/cash equivalents for any pending withdrawals. Learn about tactics and various approaches that can apply to you when it comes to asset decumulation.
Your 50s retirement planning goal: By your 50s or mid-50s, some experts recommend having saved up between 6x – 7x of your annual salary in retirement savings. Meaning, if you earn $80,000 per year (gross income), then your retirement nest egg should be in the range of $480,000 or more, per person before the end of this decade before you hit age 60. This is just a guideline of course. We believe by your 50s however most debt if not all debt is gone and you’ve started to consider all the income sources that will fund your retirement. Don’t make loose assumptions about your retirement income plan. If not yet completed, get financial projections done, get a complete financial plan done, and stress-test your all portfolio, rate of return, inflation, taxation and spending assumptions in detail.
In your 60s: Realization
Based on the building blocks established almost 40 years ago, this decade should be about realizing and fulfilling many of the milestones established during your multi-decade personal finance journey – but it’s by no means the end. In your 60s, most successful DIY investors we see and support applaud their work: all debt is gone; saving for retirement is done and if they want to continue working, it’s always on their own terms. They are not forced to work into their 70s. We believe at Cashflows & Portfolios, our most successful clients/members retire “to” something; it’s simply a new lifestyle phase that can be anything you want – something they’ve been planning for decades in advance!
- Finalize and review annually any financial plan or retirement income plan that will help you realize spending, taxation and estate management objectives year after year.
- Review and update any insurance coverage (i.e., you might not even need any term insurance or related insurance coverage at all without any debt on the books coupled with healthy retirement assets and savings).
- You might want to consider downsizing from your primary home or at least simplifying your real estate properties owned.
- Early in this decade, if not already done via your annual financial plan or retirement income plan reviews, dig into the timing, pros and cons of receiving your government benefits (CPP/QPP, OAS) along with other retirement income streams such as converting your RRSPs to RRIFs in your mid-60s for pension income tax credits.
Your 60s retirement planning goal: By your early 60s, you might be retired, semi-retired or still working – but that’s on your terms thanks to decades of personal finance planning and re-planning – resetting goals or adjusting targets along the way. Some experts by now may recommend having saved up close to 10x of your annual salary for retirement by now. Meaning, if you earn $80,000 per year (gross income), then your retirement nest egg should be in the range of $800,000 or so, per person by your mid-60s. This ignores any government benefits. Again, this is just a guideline of course. Your nest egg will always depend on your spending needs, wants and the flexibility you desire to do anything you want to do and when you want to do it. Rules of thumb from some experts are fine but retirement income planning will always be very personal and very unique to you.
Financial Planning by the Decade: A Primer
There is a lot of considerations in our lists above – we know – but it’s not as much as you think once you get into a cycle of good habits.
Financial planning by the decade is really an on ongoing cycle of small work: periodic monitoring of your savings, your investments and your insurance needs. That’s about it.
Like good dental care, do the basics very well and you’ll likely be rewarded.
Practicing the personal finance basics early and often enough should make things golden in your golden years – if not sooner. Even if you are starting this cycle later in life, it’s never too late to start learning.
The importance and benefits of establishing a general plan and reviewing that personal finance plan frequently over time, as in decades ideally, cannot be understated. We can help and are happy to do so of course since this is what we did to reach Financial Independence ourselves.
We see and hear the benefits from working with individuals and couples on these concepts in any decade – savers and investors that like to pick our brains on this site or when they take us up on our our low-cost retirement income planning services for any DIY investor in any decade.
Need any support with your retirement income projections?
Knowing how to save and invest wisely in any decade, to help you get the most out of your portfolio, is something we know about since we’ve both retired from the workforce sooner than most.
As passionate DIY investors ourselves, we offer up our time and expertise to help other DIY investors.
We enjoy helping different DIY investors who have different objectives and goals!
If you are interested in obtaining low-cost private projections for your personal financial scenario, read more about our retirement projections services.
Mark and Joe.