Age and Your Finances: Money Decisions to Make in Your 30s, 40s and 50s

As your life evolves, your financial needs change, too. Making smart financial decisions and adjusting your strategies is key to your peace of mind and financial stability over the long haul.

From buying a home to building an estate plan, here's a guide to the key financial decisions you'll have to make during three key decades of your adult life:

In your 30s

Once you reach your 30s, you’re likely becoming more established in your career. You've probably been working for several years, making this decade a great time to build a solid financial foundation. Ask yourself the following questions to guide your choices:

Yes or no on owning a home?

Homeownership is a classic part of the American dream, but it's not a priority for everyone — or even an option at all, since many young people increasingly feel it’s not an affordable choice. Even those who can manage the costs of buying a home may not necessarily want to do so. Think about if you want to become a homeowner, and all of the responsibilities and benefits that come with that.

As of 2025, the average price of a house is more than $400,000. To qualify for a mortgage, you'll need to save enough for a down payment and build good credit.

If you don't think homeownership is for you, or if you're not financially ready, renting can be a good alternative, especially in areas with relatively low rents and high housing prices. Renting a smaller or less expensive property and investing the difference between a rental and what your mortgage payment would help you build up your net worth.

Do you expect to have children?

Having children is not only an emotional decision, but a major financial one. According to some estimates, it costs upwards of $15,000 per year to raise a child. It's possible to make parenting work for less than that, but it may require additional planning and sacrifices.

When do you want to retire?

Even if your retirement years feel a long way away, thinking about when to retire, and what you want in those years, will help you enter that phase of your life in comfort.

On average, Americans retire at 64, with averages by state varying between 61 and 67, according to the Madison Trust Company. If you want to retire on the early side, you may need to take additional steps now to make that goal happen. For example, you may need to increase your retirement contributions, open an Individual Retirement Account (IRA) to supplement your employer-sponsored 401(k) or reduce your spending so you can invest more in retirement.

Do you have life insurance?

Having children or other dependents is among the reasons most people need a life insurance policy. Yet, according to insurance research company LIMRA, 42% of Americans said they needed (or needed to purchase more) life insurance, indicating there is a significant coverage gap.

Getting insurance before you’re middle-aged is a wise decision. When you're in your 30s, term life is far less expensive to buy. For example, you will typically pay more than twice as much per month for a 20-year, $500,000 term insurance policy bought at 45 years old than if you began buying the same coverage at 30, according to figures from Amica Insurance.

And buying life insurance early is not only cheaper but easier. As you age and develop health issues, you could be disqualified from getting a policy due to health issues.

In your 40s

As you enter your 40s, the demands on your finances change. Here’s what to ask yourself as you approach middle age:

Is your life insurance up to snuff?

As you reach your 40s, it's wise to review your life insurance policy and decide whether you need additional or different coverage. You may have children to provide for or elderly parents who are financially dependent on you, so you may need to increase your life insurance policy's death benefit or purchase an additional policy.

Do you need to save for college?

If you have children, your 40s are the time to start saving in earnest for their education. According to a recent study by student lender Sallie Mae, three-quarters of college families used parental income or savings to cover some of their education costs.

One of the best ways to save is opening up a 529 education savings plan, which allows you to save in a tax-advantaged way. Parents using such an account have a median of $25,000 set aside, compared to $14,000 for those without a 529 account. The first group is also on track to meet 46% of their college savings goals, while the latter is on track to cover just 20% of their goal.

Other options to invest for your children's future include a custodial brokerage account — an investment account you open and manage for them — and a custodial Roth IRA, into which you can deposit their earnings once they begin to make money on which they are taxed.

Do you have an estate plan?

More than half of Americans don't have a blueprint for what will happen to their assets after they pass on. Contrary to the belief that estate planning is only for the uber-rich, this task can be critical for people at all income levels.

If you haven't yet, it's a good idea to complete the following tasks:

• Create or update your will
• Choose a power of attorney and healthcare directives
• Review your investment account and life insurance policy beneficiaries

Completing these steps ensures your assets and belongings go to the right people.

In your 50s

This is a pivotal decade. In your early 50s, you may be sending your children off to college, and still helping to pay for tuition. By your late 50s, you might be enjoying an empty nest and actively preparing to retire.

During this decade, ask yourself these questions:

Are your retirement savings on track?

According to the Government Accountability Office, half of households with a worker 55 and older had no retirement savings. As you reach your 50s, check your retirement account balance and portfolio allocations more often than you might have in your 40s.

If your balance isn't where you think it should be, you can take advantage of "catch-up" contributions, allocating higher amounts to your 401(k) or IRA.

Do you need additional life insurance?

If you purchased term life insurance in your 20s or 30s, your policy may have expired by now. If family members are still reliant on you for financial support or your assets, you may need to purchase a new policy or opt for permanent life insurance to ensure your family is protected.

Do you need other forms of coverage?

Life insurance isn't the only form of protection you may need. People 65 and older have a 70% chance of needing at least some long-term care, according to the federal government website LongTermCare.gov, so you may need long-term care coverage or disability insurance, too.

These products are sold as standalone policies through some insurers, but they're often also available as add-on insurance endorsements or riders on some life insurance policies.

Making financial decisions

Your financial needs change over time, of course, and so in turn do the decisions you have to make. In your 30s, the focus is on establishing a financial foundation, building your career and establishing a family. When you reach your 40s, you're building wealth and ensuring your children can succeed as adults. In your 50s, with retirement on the horizon, your focus shifts to investing and securing the necessary insurance for your senior years.

You can likely make many of these financial decisions alone, especially if you use resources such as Money’s product recommendations. But it’s a good idea to meet with a financial planner to discuss your finances and goals, and to come up with a plan that best meets them.