How to Set Long-Term Financial Goals

Setting long-term financial goals is a necessary component to ensuring stability for you and your family. Without clear goals, it becomes easy to overspend, under-save, or miss out on other financial opportunities. 

Whether you’re looking to buy a house, plan for retirement, pay off large debts, or a combination of all three, you need achievable long-term goals to get you there. The earlier you identify and start planning for your goals, the more likely you are to reach them.

Key takeaways

• Long-term goals are necessary tools for reaching financial milestones.
• The SMART method is the best way to break down your goals into achievable steps.
• Even if you must readjust your goals later in life, starting to plan as early as your 20s is best.

What are long-term financial goals?

Long-term financial goals are those set for five or more years in the future to ensure financial prosperity. These goals include planning for retirement, creating generational wealth, establishing an estate plan, or paying off a large debt, such as a mortgage or student loans. 

How do short-term financial goals differ from long-term financial goals?

Short-term financial goals are those you can achieve in a more imminent period, usually within a year. These can include creating a budget, paying off smaller debts or establishing an emergency fund. While you may also be contributing to long-term goals at the same time, short-term goals differ in that they are completed in a much quicker timeframe. 

Long-term financial goal considerations by age

Time is your biggest asset when it comes to long-term financial goals. The earlier you begin, the easier they will be to achieve. However, it is never too late, and your goals may need to be adjusted over time. Below are considerations for long-term goals based on age.

Long-Term financial goals in your 20s

Generally, your early 20s are the very beginning of your independent financial journey. Knowing where to begin and what goals to set can be challenging. You don’t have to have it all figured out. This is the best time to start learning and taking small steps towards securing your financial future. 

Your 20s are a good time to:

• Begin retirement planning by opening a retirement account and calculating approximate retirement needs. 
• Start saving for a down payment.
• Pay off small debts.
• Set goals for career advancement.

Even though retirement might feel a lifetime away, it’s best to start preparing early to maximize savings and reduce stress down the road.

Long-term financial goals in your 30s

Your 30s are a time when many settle into their careers and make higher-than-entry-level wages. Ideally, increased financial security will allow you to feel comfortable in working towards long-term goals. 

At this age, goals may include:

• Paying off student loans.
• Setting a retirement age.
• Improving credit score.
• Continuing or increasing retirement savings contributions.

With a stronger understanding of your aspirations and adult needs, your 30s are a good time to solidify and work towards long-term goals.

Long-term financial goals in your 40s

Life is full of responsibilities in your 40s, from asset ownership to a growing family. Many people review their long-term goals at this time and adjust them for changing needs. 

At this stage, consider:

• Paying off any remaining non-mortgage debts.
• Maximizing your earning potential.
• If you have children, investing in your child’s college fund.

Due to life circumstances and changes, many people at this age take the time to reassess their long-term goals to ensure they still align with their needs. If so, this is a good time to make any adjustments.

Long-term financial goals in your 50s & 60s

At this stage, you are approaching retirement age and should begin to see your long-term goals come to fruition. This is the time to focus on achieving the end stages of your goals and maximizing resources. 

Goals at this age include:

• Becoming entirely debt-free.
• Reevaluating your estate plan, including your last will and testament. 
• Planning for long-term care in old age.
• Ensuring your lifestyle is sustainable through your planned retirement income.

Why are long-term financial goals important?

Long-term goals are important to avoid stress later in life and ensure you are prepared for retirement and old age. For example, income from Social Security is usually insufficient and must be supplemented with other income. Without long-term financial goals, you could be left without enough money to sustain your lifestyle during retirement.

Tips for setting financial goals (SMART)

Setting goals is one thing; how to actually achieve them is another. According to a poll by NerdWallet, while 9 in 10 Americans (90%) said they set financial goals for 2025, 45% of those goal setters said they either “aren’t on track to hit their biggest money goal or they aren’t sure.”

The SMART method is a framework that can help make long-term goals less daunting. SMART stands for specific, measurable, achievable, relevant, and time-bound. 

For example, if your goal is to buy a house, how will you get there? Creating a SMART goal can help. Rather than just saying “I want to buy a house,” the SMART approach would be “I will buy a house with a $42,000 down payment by saving $700 a month for the next five years.” 

Bottom line

Long-term goals are necessary for ensuring financial security throughout life, but figuring out how to achieve them can be daunting. Horizons Wealth Management’s financial planning and retirement planning services can help you understand, plan for, and achieve your long-term goals.

Long-Term Financial Goals FAQ

What is an example of a long-term financial goal?

A common long-term financial goal is having enough money for a down payment on a house. Others include saving for a child’s college education or saving a certain amount of money for retirement.

What is the first step in creating a successful long-term financial goal?

Use the SMART method. Rather than setting goals with vague objectives, SMART goals require you to break down the process. When you have a clear intention and steps for how you’ll get there, your goals become much easier to achieve. 

Can an investment manager help my long-term financial goals?

Yes, an investment manager can help you reach your long-term goals. They can provide you with individualized strategies that work for your financial needs.