Developing a financial plan

  • A financial plan can help stop certain life events turning into crises.
  • Age-related milestones can shape a financial plan and reflect its effectiveness.
  • People's spending patterns and financial priorities change as they age.

Many people only start developing a financial plan later in life because of major, and often unfortunate, events. But the earlier you start, the more time you have to build your plan and learn the skills you need to make your financial plan a reality.

developing a financial plan

No matter your stage in life, there are benefits in creating a financial plan. These life stages, their traits and priorities are summarised below.

Note: While everyone's situation is different in some way, and yours may not fit the mould, these categories are used to show the common threads that many of us will experience.

Starting out (age 20-29)

You are new to the workforce, often earning an average wage and looking to advance your career. Types of debts you have might include credit cards, car loans and student debt (often in the form of HECS-HELP (subsidised) or FEE-HELP loans for Australian citizens). You may be living at, or on the verge of leaving, home; single or in a relationship. You will not to be too concerned with your superannuation or insurance needs.

Young workers (age 30-39)

You are more focused on building your career or business and starting a family. Your major financial issues are often around getting married and buying a first home. You may already have young children, be recently married or in a de facto relationship.

You might have some savings, already have a mortgage, and be juggling credit card debt. Depending on your cash surplus, you may be looking at:

  • household budgeting
  • business planning
  • debt management
  • family healthcare
  • income protection
  • boosting superannuation
  • investment strategies
  • insurance.

Mid-life (age 40-49)

This is the consolidation stage where achieving a comfortable lifestyle and securing a long-term financial future gain importance.

Having children usually prompts people to start thinking about their long-term future, and many in this age group will have a family and school-age kids. Your immediate financial issues are around meeting expenses such as childcare or education fees.

To help ensure a comfortable lifestyle, you are highly likely to be concerned with investments, inheritance issues, tax management and healthcare.

Did you know?

Those in the mid-life and pre-retirement stages of life are often called "the sandwich generation". They may have had children later in life, could have adult children living at home; and also could be caring for, or monitoring the care of, elderly parents.

Pre-retirees (age 50-59)

People in this age group often have children at school-leaver age looking to establish their independence. Pre-retirees' main concerns are usually retirement planning, eliminating debt, protecting assets, helping their children, and estate planning such as Wills and trusts.

They are often at the tail end of mortgage and investment payments, and looking to cut back their work hours and transition to retirement, depending on their financial position. Retirement planning, lifestyle protection and long-term care become more of a reality.

Getting ready to retire or retired (age 60-67)

With 20 to 40 years of retirement ahead, your priorities will depend on how well you have prepared.

At age 60, you can start accessing your superannuation savings without paying tax. Further, superannuation fund members under 67 can make personal tax-deductible superannuation contributions without restrictions.

One of the main challenges is downsizing to a smaller home and adjusting your living arrangements. Wish-list pursuits may include buying an investment property or embarking on a sea or tree change.

This stage of life brings reflections on how much time you've got left and how long your money will last. Practical considerations include whether you need to continue working part time, leaving an inheritance, and having a power of attorney (a legal document that gives authority for someone else to manage their assets and make financial and legal decisions on their behalf (see "Financial planning and families" section of this guide for more information).

Priorities include:

  • protecting assets
  • eliminating debt
  • family healthcare
  • helping children and grandchildren financially
  • retirement planning
  • Wills and trusts (i.e. arranging for a person or "party" to manage assets on their behalf; see Financial planning and families section of this guide for more information)
  • business exit strategies.

Retired (age 68 and beyond)

Retirees should hopefully have enough money to live comfortably, looking to enjoy their time through activities such as travel or hobbies, spending time with their family and thinking about the transfer of their wealth.

You can still make personal contributions to your superannuation fund until age 75, but to be eligible for a tax deduction for those contributions, you will need to meet the Australian government work test.

Information on this work test can be found on the Australian Taxation Office (ATO) website (www.ato.

Other considerations for this group include:

  • protecting their assets
  • preserving their money
  • healthcare
  • aged care planning
  • social security benefits
  • minimising inheritance-related taxes
  • gifting to family
  • estate planning.


Many older retirees aged 80 and over cannot engage in the same activities as their younger years because they require greater care and support. They may need more in-home care and assistance with day-to-day activities, such as cleaning, meals and shopping. Ongoing medical issues can eat into an older retiree's budget, particularly out-of-pocket or ongoing costs.

 Benefits of financial planning
 Financial planning information sources