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Money milestones to aim for in your 30s, 40s, and 50s

Key takeaways

  • Once your financial foundation is stable, it may be a good idea to consider ways to optimize your protection, debt, and savings.
  • That can include saving enough for emergencies to cover essential expenses for 3 to 6 months, basic estate planning, paying down debt with an interest rate higher than 6%, and contributing the maximum to tax-advantaged accounts.

Everyone’s goals are different but if you’re aiming for optimal financial health there are some key milestones along the journey to aim for. You can hit these targets at any age but for many people it may happen in your 30s, 40s, and 50s. Those are the decades when your income may be increasing along with your ability to save for the future. But no matter what age these occur, it's a good time to start—and may even be in better shape than you imagine.

For instance, you may already have a strong financial base if you are:

  • Spending less than you earn
  • Using a health savings account (HSA) or flexible spending account (FSA) for qualified medical expenses
  • Saving $1,000 for emergencies
  • Getting the full match to your workplace retirement account
  • Paying off high-interest credit card debt

Read Viewpoints: 5 small steps that can make a big impact

Once your financial foundation is strong, there are 5 more important milestones to achieve on your way to your goals.

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1. Saving big for emergencies: 3 to 6 months’ worth of essential expenses

Fidelity suggests aiming to save $1,000 to get your emergency savings started. Ultimately, the goal is to save enough to cover 3 to 6 months of essential expenses. At the beginning of your career, that can seem like an impossible amount of money to save but as you get older and wiser, you may feel more confident about saving.

People in their 30s and 40s often have growing responsibilities including children, a house, education costs, and even caring for aging parents. Building and maintaining significant emergency savings can help you sleep at night and get through the messy middle years of life with your finances intact.

2. Getting a basic estate plan in place

With people (and pets) who may be depending on you, planning for worst-case scenarios can make good sense. Carrying the insurance that may be offered through an employer can be a good start, including health, life, and disability. But as you get older and take on more responsibilities, it becomes increasingly important to protect what you have—and those you love.

Some important estate-planning steps to consider include:

  • Ensure that your beneficiaries are named where possible for your 401(k), IRA, HSA, and life insurance, for example. And always double-check that your beneficiary designations are up to date.
  • Review the way your accounts and assets are titled to ensure that they pass to the right people as smoothly as possible. For instance, if you’re married, a joint checking or cash management account for paying bills could make sense or owning a home titled as joint with rights of survivorship.
  • Write a will explaining how your assets should be dispersed. This can be critical; otherwise, your wishes may not be carried out and your assets will be distributed according to the laws of your state.

Read Viewpoints: Do you need an estate plan?

3. Aiming to be free of high-interest debt

If you’re free of high-interest credit card debt, congratulations. If you’re not quite there, having a plan to pay down that debt can be nearly as liberating. Getting out of debt is one of the best things you can do to help reduce money stress and reach your goals.

Once you’ve knocked out any high-interest debt from credit cards, making a plan to pay off debt with an interest rate above 6% can also be advantageous—particularly if you’re trying to decide whether to put more money toward an existing debt or contribute more to a retirement account. Fidelity’s guideline suggests that in general, you should pay down debt with an interest rate of 6% or higher before investing beyond the employer match in a retirement account—but it depends on your risk tolerance and financial situation.

Read Viewpoints: Should you pay down debt or invest?

4. Maximizing contributions to tax-advantaged accounts

Health savings accounts (HSAs), 401(k)s, and IRAs offer tax advantages for saving. After fully funding your emergency savings at the level you need to feel protected and you’ve paid off high-interest debt, it can make sense to start contributing the maximum to these types of accounts in any order that makes sense for you and your financial situation.

  • Fidelity suggests maximizing contributions to an HSA, if you have an HSA-eligible health plan. Consider contributing up to the annual maximum while keeping enough cash for annual medical expenses you will pay out of the account.
  • If you have a workplace savings plan like a 401(k) consider contributing up to the annual maximum and, starting at age 50, you can contribute another $7,500 per year in catch-up contributions.
  • Try to make the maximum annual contribution to an IRA. Starting at age 50 you can contribute another $1,000 in catch-up contributions. There are generally 2 types of IRAs, traditional and Roth. To learn how to make the most of the choice, read Viewpoints: Traditional or Roth account? 2 tips to help you choose

5. Consider paying some or all qualified medical expenses out of pocket, not from your HSA

An HSA offers triple tax savings,1 which means you can contribute pre-tax dollars, pay no taxes on earnings, and withdraw the money tax-free now or in retirement to pay for qualified medical expenses. That means if you pay qualified medical costs out of an HSA, the money you take out is tax-free.1

That can be a significant benefit, especially if you also invest the money saved in your HSA for growth potential, it has the chance at tax-free, or tax-deferred, growth for decades. In retirement you could use the money in an HSA for qualified medical expenses and after age 65, you can use the account like a traditional IRA or 401(k) if you wish. Ordinary income tax would be due on any withdrawals not used for qualified medical expenses.

Finally, you should know that you can reimburse yourself from your HSA at any time for qualified medical expenses you’ve paid out of pocket. Consider keeping detailed receipts for medical costs for your records. As long as your HSA was opened before the expense was incurred, you’ll be able to pay yourself back tax-free.

Read Viewpoints: 5 ways HSAs can help with your retirement

What’s next?

Your journey doesn’t have to end here. There are even more ways to improve and refine your financial picture. Further tax-advantaged savings options to consider include tax-deferred annuities, nonqualified deferred compensation plans, or tax-managed brokerage accounts.

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1. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. Please consult with your tax professional regarding your specific situation. 2. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. Please consult with your tax professional regarding your specific situation.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

The information provided here is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, customers should be strongly encouraged to consult their tax advisor before opening an HSA. Customers are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS Web site at They can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses (including the Health Coverage Tax Credit),online, or you can call the IRS to request a copy of each at 800.829.3676.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917