The Smart Woman’s Guide to Planning for Retirement

You’ve likely heard more than a few times that hindsight is 20/20. It’s true. Who among us cannot look in the rearview mirror of life and see things more clearly?

While I am determined not to live my life with regret, there are a few things I wish I’d known sooner. Like how the decisions I made in my twenties would throw my thirties into a major tailspin. Had I known, or cared, perhaps I could have avoided some very costly mistakes.

What follows are simple guidelines or benchmarks for your 20s and 30s as it relates to preparing for retirement.

In Your Twenties

This is your defining decade and by far the most important decade for retirement planning. You’re younger–and probably poorer–than you’ll ever be again.

What you’re experiencing now in your twenties may not feel big enough or important enough to have anything close to a lifetime impact. Your income is low, your debts may be high, and you may feel as though you’re living on the financial edge. Even though what you are experiencing now may not appear to be important, the truth is that big events of life don’t always start out big.

The good news is that because you are young you haven’t picked up a lot of bad financial habits. You have time to build a solid financial life. And the sooner you get on with that, the less it is going to cost you in the future to make up for any mistakes you make because you will make far fewer of them.

Develop your financial intelligence. Start by becoming an effective money manager. Get your act together now by putting together a spending plan. Assign every dollar that flows into your life a job to do, then follow up to make sure it did as it was told.

Start an emergency fund and get out of debt. Build your emergency fund as quickly as you can. This will give you the cushion you need to weather unexpected expenses and emergencies without having to raid your retirement savings. If you’re in debt, fix that now and not later.

Open a retirement savings account. Join and participate in your employer’s retirement savings plan, at least to the match, as soon as you qualify. Open and fund a Roth IRA as well. Consider yourself on track if you are regularly contributing 5 percent of your annual income to retirement savings.

Stay physically, emotionally, and spiritually fit. Retirement preparation is not all about money. It also involves building and maintaining physical health by watching what you eat and exercising–both of which are much easier to begin when you’re young and filled with energy.

Your twenties matter. By making a decision now to start saving and preparing for the years you will spend in retirement–no matter how far away they seem–you will make a life-changing decision you will never regret.

In Your Thirties

Your college loans are probably paid off; you may be married and starting a family. You have career goals, but you haven’t reached your full earning potential. If you want to retire by age sixty-seven, you have about thirty years. If you’ve been saving, you’re on your way. But if you’ve put it off, it’s time to catch up.

Fund your 401(k) and a Roth IRA. If your employer offers a 401(k), participate at least to the point of the match so you don’t leave any free money on the table. Also open a Roth IRA and make funding it to the maximum each year a top priority. Set up automatic deposits to do this so you won’t have to rely on your memory or make that “Will I or won’t I?” decision every time you get a paycheck.

Buy a home. Siphon off a down payment from the savings you have been growing with 10 percent of your take-home pay. Do not give into the temptation to buy the most expensive home you can ford. Instead, buy half the home you can afford, then make the largest payments you can afford. Your goal is to own this home outright as soon as possible. Do not enter into any home equity loans. That’s a way to shoot yourself in the foot.

Set a goal for college savings. When the babies are born is the time to start saving for college. You may be squeezed already, but now is the time to determine your philosophy on who pays for college. You do not want to go into debt for this. If you plan to pay for all or part of your child’s education, do that with money you have saved and invested, not with loans you take on in eighteen to twenty years.

Purchase life insurance. If there are people who depend on your income who would be in a desperate situation without it if you were to die, you need life insurance. Here’s some good news. Term life insurance has become very cheap in the past few years.

Build your Contingency Fund and get out of debt. Your Contingency Fund should be your first priority. Unfortunately, you don’t have time to devote your attention to just one area at a time. So at the same time you are saving for emergencies, you must pay off your unsecured debt.

Your thirties matter because these are the years that you’ll make the big financial decisions of life–kids, house, and career. This is the busy decade, and with all of the joy and high-speed living that comes with raising a family, it’s easy to lose sight of planning for the future. I know how easy it is to assume there will be plenty of time for that later.

Mary Hunt is a syndicated personal finance columnist and the author of The Smart Woman’s Guide to Planning for Retirement (Revell, Nov. 5, 2013). For more advice on planning for retirement with confidence connect with her on Facebook at