Wealth Insights

Financial milestones: Checklist for every stage of life

New life events unlock opportunities to refine your financial planning. This checklist provides guidance on navigating milestones both big and small.

Key takeaways

• Financial milestones are important opportunities to review your goals, update important documents and adjust your financial plan.
• Certain ages trigger key decisions involving retirement accounts, Social Security, Medicare, healthcare coverage and estate planning.
• Major life events such as marriage, the birth of a child, divorce, retirement or large purchases can significantly impact your long-term financial strategy.

Each year brings new chapters in life, from joyous celebrations to significant transitions. These milestones aren’t just markers of time. They’re powerful opportunities to review and optimize your financial plan. To ensure your wealth strategy remains aligned with your evolving life, we’ve put together a comprehensive checklist of key life events.

Birthday milestones

• Age 18 – Generally, a parent’s legal right to act on behalf of their child for medical purposes ends when a child reaches age 18 (in some states including Alabama the age is 19). This is true regardless of whether the child is covered by their parent’s medical insurance. Should an event arise where the child becomes unable to make their own decisions, parents may petition the court for guardianship or a temporary power of attorney. Having your child complete a medical power of attorney may help reduce the likelihood of court involvement and simplify decision-making in the event of an emergency.
• Age 21 – In most states, the age at which a beneficiary gains control of assets held in a Uniform Transfers to Minors Act (UTMA) account is age 21. However, it varies by state and, in some cases, by how the account was established. Once the beneficiary reaches the applicable age, the UTMA custodian must transfer the account to the child’s control. Depending on the amount of assets involved, planning for the transition may be prudent.
• Age 26 – Under the Affordable Care Act, employer and individual health insurance plans offer dependent child coverage until a child reaches the age of 26. At such time, the child may have multiple options for obtaining new health insurance coverage. If the child is employed, they can inquire if they are eligible for their employer’s plan. Alternatively, a child may be eligible to purchase temporary extended health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or similar state laws. Additional information for these state specific laws can be obtained from the parents’ employer or the State Insurance Department. A third option is for the child to purchase individual coverage through the Health Insurance Marketplace.
• Age 50 – Beginning at age 50, individuals become eligible to make additional “catch-up” contributions to certain retirement savings accounts. Contribution limits are adjusted periodically by the IRS and should be reviewed annually. Catch-up contributions can help individuals accelerate retirement savings during their peak earning years.
• Age 55 – An exception to the 10% penalty for withdrawals from 401(k) plans prior to age 59½, the “Rule of 55” allows individuals who leave their job in or after the year they turn age 55 to take penalty-free withdrawals from the 401(k) associated with their most recent employer. While the Rule of 55 allows individuals to avoid the 10% early withdrawal penalty, ordinary income tax will generally still apply to distributions from traditional accounts. A key planning consideration is that if the account is rolled into an IRA, penalty-free IRA withdrawals generally are not available until age 59½. In addition, access to funds may vary based on plan-specific distribution provisions so participants should confirm available withdrawal options with their plan administrator. Individuals also become eligible to make catch-up contributions to a Health Savings Account (HSA) beginning at age 55.
• Age 59 ½ – At age 59 ½, individuals may begin taking withdrawals from their traditional retirement accounts without incurring a 10% early withdrawal penalty.
• Age 60 – Individuals ages 60 through 63 may be eligible for enhanced catch-up contribution limits for certain employer-sponsored retirement plans, subject to annual IRS limits and plan implementation. Contribution limits are adjusted periodically and should be verified annually when planning retirement savings strategies.
• Age 62 – Generally, age 62 is the earliest a person can elect to begin receiving Social Security retirement benefits. If an early election is chosen, the monthly benefit amount will be subject to a reduction from what the person would have received had they waited until full retirement age to begin receiving benefits. A key planning consideration to remember is that an additional reduction or even elimination of benefits may apply to individuals who elect to receive retirement benefits before full retirement age but continue working. Individuals may wish to complete a Social Security analysis using their most current Social Security statement before making a decision about when to begin benefits.
• Age 65 – Medicare is available for people age 65 and older. The “initial enrollment period” starts three months before the month of the person’s 65th birthday and ends three months after their birthday month. Failure to enroll during the applicable enrollment period may result in a late-enrollment penalty unless an individual qualifies for an exception such as certain employer-sponsored coverage arrangements. Individuals covered by qualifying employer-sponsored health coverage may be able to delay Medicare Part B enrollment without penalty. Because eligibility rules can vary based on employer size and coverage type, individuals should confirm their circumstances before delaying enrollment.
• Age 66/67 – Full retirement age for Social Security benefits depends on an individual’s year of birth. For those born in 1960 or later, full retirement age is 67. At full retirement age, individuals may receive their full Social Security retirement benefit without reductions associated with early claiming or the Social Security earnings test. Learn more at ssa.gov/retirement/full-retirement-age.
• Age 70 – For each year that a person waits past their full retirement age to elect to receive their Social Security monthly retirement benefit, the benefit increases by 8%. After age 70, there is no additional benefit for waiting as the retirement benefit will no longer be eligible for an increase.
• Age 70 ½ – At age 70½, charitably inclined individuals may begin making Qualified Charitable Distributions (QCDs) directly from their IRAs to qualified charities. Annual QCD limits are indexed for inflation and should be verified each year. A QCD is an otherwise taxable distribution paid directly to a qualified charity and excluded from the individual’s taxable income. QCDs may also satisfy all or a portion of an individual’s required minimum distribution, subject to applicable IRS rules.
• Age 73 – Required minimum distributions (RMDs) generally begin at age 73 for individuals born between 1951 and 1959. The first distribution typically must be taken by April 1 of the year following the year the individual reaches the applicable RMD age. RMDs from certain employer-sponsored retirement plans may be deferred until retirement if the individual continues working and meets plan requirements. Failure to take a required distribution may result in IRS penalties.
• Age 75 – Under SECURE 2.0, individuals born in 1960 or later generally begin required minimum distributions at age 75 rather than age 73. Retirement income plans should be reviewed periodically to account for these timing differences.

Life events

• Birth of a child – The birth of a child can be one of life’s most significant events. When planning for the addition of a child, it is prudent to update the family budget, create and implement an estate plan (including appointing a guardian), consider life insurance options, review and update beneficiary designations, consider establishing a college fund and review other planning strategies based upon your situation. Review health insurance coverage and update emergency contacts and beneficiary designations as needed.
• Marriage – Preparing for marriage requires thoughtful planning and communication. Understanding state laws that may govern medical decisions and asset distribution can help ensure your wishes align with your goals. Depending on your circumstances, consider discussing wills, powers of attorney and, where appropriate, prenuptial agreements with qualified legal counsel. You should also review your budget, life insurance, beneficiary designations, tax filing strategies, employer benefits and retirement accounts. An annual wealth planning review can help keep these decisions aligned with your evolving needs.
• Divorce – Divorce can be one of the most stressful life events an individual may experience. In the event of a divorce, it’s imperative to plan for the next phase of life. Communication and coordination between your legal counsel and wealth advisor is important to ensure settlement ramifications are clearly understood and planned for. Family budget considerations, insurance needs and any beneficiary designation changes are immediate planning issues to be addressed. You should also consider an estate planning review and implementation of an updated estate plan to reflect not only the settlement agreed to but to capture new intentions and planning objectives. Review account ownership, powers of attorney and healthcare directives to ensure all documents align with the finalized settlement and current wishes.
• Large purchases and sales (such as a home and/or business) – Large purchases and sales may provide excitement but also some stress. It is important to incorporate any large purchase or sale into a wealth plan and review the impact to quality of life. The sale of an income-producing asset may prove to be uneconomical if the proceeds are not sufficient to maintain your standard of living. Conversely, while there may be sufficient funds to make the initial asset purchase, ongoing expenses may be too cumbersome to maintain course. Title, tax implications, asset protection and insurance considerations should also be taken into account with any large purchase or sale.
• Retirement – Planning for retirement begins with understanding an individual’s current financial picture and options (e.g., pension benefits, equity compensation, etc.), assessing retirement needs (e.g., expenses, health insurance) and ensuring sufficient cash flow for the years to come. In addition to evaluating financial security, it is important to create a personal plan that provides clarity of purpose during retirement years. A focus on retirement “wants” based upon an accurate, realistic balance sheet will allow for a more precise cash flow picture and probability analysis.

Talk to your wealth advisor about

1. Reviewing your wealth plan as your life circumstances change.
2. When and how to involve your family in wealth planning discussions.

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