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Investing by Age for Your Future

Even though most people share the goal of reaching retirement, our individual plans to reach that goal are unique.  Markets will change over time and so will your savings and spending priorities. Whether you’re focused on buying your first dependable car or buying a home, paying off your student loans or putting your children through college, it’s important that you develop a retirement plan and stick to it. Your vision for a secure retirement will likely remain constant and getting there takes dedication. The good news is that investments tend to grow over the long-term and small steps throughout your career can yield positive results. Here are a few tips to put you on track for a solid financial future. 

In your 20s 

You likely have just started out in your professional career and may be financially responsible for yourself for the first time. This is a great time to start building good financial habits. 

Start with creating a budget to help meet your savings goals. Take your income and subtract your expenses to know what your potential savings could be. List each expense, including any debt such as car payments, student loans, rent, utilities, etc. Also be sure to list discretionary expenses such as entertainment and going out to eat. Learning about your spending habits gives you the opportunity to make good financial choices like where you can save money and how you budget to meet your long-term financial goals. The next step is managing your debt by paying off credit cards in full each month and paying extra, when possible, on higher interest loans. If you have extra funds after building up short-term emergency savings, contribute to your employer’s retirement plan – especially if your employer matches your contributions.  

Unlike a savings account, which typically offers low-interest rates but is easily accessible, your retirement investment is a long-term plan that may be difficult to access without penalties. For many investors, starting with a target date fund that matures at your retirement age is an option to consider. As a PERA member you have access to PERAPlus retirement plans and access to investment information on If you haven’t registered your PERA account, provided your contact information and named your beneficiaries yet, the process is easy and only takes a few minutes. Registering ensures you receive all the information about your PERA benefits and can quickly monitor your progress. 

In your 30s 

At this point in your career, you may see increased earnings and be able to save more of your income. For many people, this is also when you see increased expenses such as buying your first home or starting a family. If you established a good foundation and financial habits, you can be well prepared to balance increased expenses with steady savings. You may want to think about using automatic payments for mortgages, retirement, savings, and your children’s future college tuition. By systematically investing in your future with a fixed amount on a regular basis, you develop the discipline of a long-term investor and can take advantage of cost averaging and compounding interests that will help to build your nest egg. 

During this decade, it’s still important to continue managing your debt and stay focused on your long-term goals. This may mean avoiding credit card debt, foregoing a vacation or flashy new cars to meet financial goals. If you are meeting your long-term savings and investing goals each month, you may have additional discretionary income to increase savings or for luxuries. The situation is different for every individual and each person will need to consider how these financial decisions impact their long-term financial goals. 

In your 40s 

At this age, you may have college tuition to pay for or aging parents who need care. Some of these big expenses may have been in your long-term savings strategies for a few years or may be funded from other sources such insurance or your parents’ assets, but contingency savings should be considered in case you incur unexpected costs or experience a job loss. This also is the time to make sure you’re on track for retirement, which is only 20 to 25 years – or less – into the future. If you’ve paid off big expenses such as college tuition, you may want to consider shifting some of that money toward additional retirement savings or paying down a mortgage. 

In your 50s and 60s 

As you enter your 50s, you are likely in your peak earning years, possibly empty nesters and experiencing increased disposable income. This is a great time for a financial check up on your retirement planning.  

You may want to set a goal of paying off your mortgage before retirement, downsizing to a home you would enjoy in retirement, and catching up on any retirement savings that fell behind. The IRS allows for additional catch-up savings to go to 401(k) and 457 accounts, and you may be able to take advantage of this provision if you’re behind on your goal. Contribution limits are available on the PERAPlus information page. 

By logging into your PERA account dashboard, you can view your estimated monthly retirement income, account balances and view your PERAPlus account balances to better understand your individual retirement position. Some PERA members may be ready to retire in their 50s depending on the years of service credits earned or purchased and how much they’ve saved in their PERAPlus accounts. If you’re not sure if you can retire yet, PERA has resources to help you decide when you can retire. If you’re ready to retire, PERA offers steps on how to retire and suggests that you submit a retirement application 60 to 90 days before you plan to retire. Your retirement date is the first day of the month after your last physical day on the job.