It appears (knock on wood) this brutal recession may finally be coming to an end.  As we let out a collective sigh of relief, many people are starting to poke their heads up and ask, “Am I on Financial Track?”  Here are some rough rules of thumb that you can use to benchmark your progress as you move through life’s decades.

IN YOUR 20s: Your key challenge is to learn to live within your means. Steps to take include:  Avoid credit card debt like the plague. Make at least the minimum monthly payments on your students loans, on time, every month. Build a starter emergency fund of at least $2,000, and start contributing your employer 401k/403b.

IN YOUR 30s:  Your key challenge is to build a solid financial foundation. Save for a home down payment – but don’t bite off more house than you can chew. Build that emergency fund up to at least 3 and ideally 6 months of living expenses. If you have children make sure you have term life insurance equal to 10x to 15x your income and a Will naming a guardian.

IN YOUR 40s:  Your key challenge, as you enter into your peak earning years, is to avoid lifestyle creep. If you have not been saving at least 10% of your gross income in your 20s & 30s for your retirement, it’s time to kick it into high gear by committing to save at least 15%. If you have kids and want to help them pay for college, it’s time to open a 529 plan account (if you haven’t already). Resist the urge to splurge, these are your peak earning years… and they should also be your peak saving years.

IN YOUR 50s:  Your key challenge is to resist the temptation to make up for lost time by swinging for the financial fences. Check your asset allocation in your retirement plan – this is the time to start easing up on stocks. “100 minus your age” is good rule of thumb for the maximum percentage of your portfolio to have in stocks at this stage if you are a man. “110 minus your age” is a good rule of thumb if you are woman. Consider long-term care insurance. Make sure your Will & related documents (medical & durable power of attorney) are updated for any life changes since original creation.

IN YOUR 60s & 70s: Your key challenge is to not over-nibble on your nest egg.
Think long and hard about spending more than 4% of your savings annually once you are in retirement. If you have not amassed your desired savings nest egg, it’s time to think about working longer or part-time. Talk to your children about your estate planning wishes.

IN YOUR 80s & beyondEnjoy, you’ve earned it! (and share that hard-won wisdom, it would be an honor to learn from you.)

Are there any additional tips you think should be added to this list?  If so, I’d love to hear…