The ultimate guide for retirement planning in your 20s, 30s, 40s, 50s, & beyond

Morgan Stanley Wealth Management


Summary: Retirement planning can be a key part of your overall financial plan at any age. It's never too early—or too late—to start building a nest egg for your future financial security.

Through each stage of your life, retirement planning requires a renewed focus as you reach different financial milestones. It’s a good idea to start with establishing healthy savings strategies. Then, you can start investing and allocating your assets to support your goals as you build your wealth. Later in your life, your priority will likely shift to retirement income.

No matter when you start saving for the long-term goal, first take a moment to understand your overall goals. Ask yourself key questions such as:

What is your idea of a comfortable retirement?

When would you ideally like to retire?

Will you downsize from your current home, work part time, maintain multiple residences?

Once you have articulated your goals, you can use the Retirement Planning Calculator to help you create a personalized plan, track your progress, and get helpful tips to boost your outlook.

Here are some ways to save for retirement at different stages of your life:

timeline for retirement planning



  • Buy a home
  • Have a child
  • Build an emergency fund
  • Protect family
  • Manage budgets

Late career


  • Buy a larger home
  • Send children to college
  • Assist aging parents
  • Plan for future healthcare
  • Plan for retirement



  • Maintain lifestyle and sufficient income
  • Meet healthcare and other unforseen expenses
  • Buy a vacation home
  • Legacy planning

Early Mid-Career: Starting to save

In your young adult years, you are likely focusing on some of your first major milestones—like buying a home or ­having a child—as you get your career underway. You may be faced with student loan debt or credit card debt while trying to manage a budget and protect your family.

As you plan for short-term financial goals, you can start working toward a secure retirement by establishing a good savings plan.

How to prioritize your savings

  1. Emergency fund

    First, consider establishing an emergency fund. Having enough money to cover expenses when you face unexpected events can help keep you on your financial track. Saving at least three to six months' worth of expenses is generally a good rule of thumb.
  2. HSAs and 401(k)s for employer matching funds

    Next, focus on contributing up to the matching maximum toward a Health Savings Account (HSA) and a 401(k) (or other retirement plan) if your employer offers matching funds for those contributions. That way, you can avoid leaving “free money on the table” as you build a retirement nest egg.
  3. Revolving debt

    The next priority for savings in your budget is to make extra payments toward revolving debt like credit card debt. Paying down high interest rate debt can help you lower the burden it places on your finances. You can then use the money you save on interest toward other goals like retirement savings.
  4. Maximum 401(k) and HSA contributions

    Once high interest rate debt has been paid down, look to make more contributions to tax-advantaged accounts like HSAs and 401(k)s beyond employer-matching limits and up to the maximum contribution.

    For 2021, annual contribution limits are:

    • HSAs: $3,600 for individual coverage; $4,600 for individual coverage if you are over 55; $7,200 for family coverage; or $8,200 for family coverage if you are over 55.
    • 401(k)s: $19,500; or $26,000 if you are over 50.

    The earlier you start investing, the more you can take advantage of the power of compounding , which can have a significant impact on retirement savings.

    If you start saving later, you can use “catch-up" contributions after a certain age for an extra boost.
  5. IRAs

    Depending on various factors, such as your income, tax filing status and age, you can also use a Traditional or/and Roth Individual Retirement Account (IRA) to save and invest with tax advantages. For 2021, the annual contribution deduction limit for an IRA is $6,000, or $7,000 if you are over 50.

    The benefit of a Traditional IRA is that contributions are tax deductible, and your earnings usually grow tax-deferred with taxes paid at withdrawal. For Roth IRAs, contributions are not tax deductible, however your earnings grow tax free, and qualified withdrawals are tax- and penalty-free.1 They are exempt from the required minimum distribution rules in retirement that can be punitive from a tax perspective.

    The E*TRADE IRA Selector tool can help you determine if a Traditional or Roth IRA may work for you and how much are you able to contribute.
  6. Brokerage accounts

    If you've reached your contribution limits, consider yourself lucky because this is certainly a good “problem" to have.

    You can continue to build your savings and work toward a comfortable retirement by opening a brokerage account. There, it may make sense to focus on tax-efficient investments, such as index funds and municipal bonds.

    While brokerage accounts have no tax advantages and as a result, typically grow more slowly, they are also not subject to the same restrictions as other accounts with respect to when money can be withdrawn without penalty, and to what purpose. So, these accounts are a good place to grow the nest egg you will need for financial goals at any stage in life. For example, you could use funds in a brokerage account to make a down payment on a home or fund a new business with no early withdrawal penalty.

Late Career: Building your wealth

By your 40s and 50s, you may be targeting new milestones like buying a larger home or paying for your child's college, perhaps while caring for aging parents.

At this time, you can hone your portfolio investment strategy, as more details about your career, dependents, and retirement needs, including potential healthcare considerations, have come into focus. Choosing asset allocations is key to reaching your personal goals.

Don't put all your eggs in one basket

Allocating your investments among stocks, bonds, and cash can help you manage risk while maintaining growth potential. Remember, being too conservative (e.g., staying in all cash) can be riskier than being too aggressive. For starters, if the value of your assets doesn't keep pace with inflation, it loses its purchasing power. Most Americans need to have significant growth in their portfolios above inflation if they want to maintain their standard of living throughout retirement, which can potentially last for several decades.

Rebalance your portfolio periodically as the markets change so your allocation stays on track. And, if your goals change, you will need to adjust your retirement plan, and possibly your asset allocation strategy. When dealing with such complexity, many people find that it helps to consult with a financial advisor.

Consider consolidating your assets

If you've ever changed jobs, you may be juggling more than one employer-sponsored retirement plan. Consider consolidating them into one account to make it easier to monitor how your investments perform.

When all your retirement resources are consolidated into a single portfolio, it’s far easier to align them to the strategy that aligns with your financial goals. The E*TRADE Rollover Tool can help you understand your options as you consider what to do.

Retired: Tapping into retirement income

In your post-working years, your financial focus will shift from accumulating savings to creating a retirement income that can meet your needs, including supporting any health care and other unforeseen expenses. Goals at this stage may also include big ticket items, like financing a child’s wedding or buying a vacation home. It will also often include legacy planning.

You can benefit from a retirement plan that is flexible and can adapt with you over time. You may want to use guaranteed income like Social Security, a pension, or an annuity to cover, at least in part, the cost of your essentials and other regular expenses regardless of what happens in the market.

Meanwhile, consider investments with growth potential to help you meet your long-term needs and legacy goals. Learn more about retirement income planning.

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