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3 Financial Planning Tips for People in their 40s

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Monday, March 29, 2021

Financial planning is generally aimed at either young adults or folks nearing retirement age. But the generation caught between Boomers and Millennials, people in their 40s, have just as much to plan for.

GenXers are less likely to be grappling with as much student debt as a Millennial and not yet navigating through the maze of Medicare and pre-retirement logistics.

In your 40s it’s prime time for focusing on financial health, by righting some wrongs made in the earlier years and taking advantage of the time you have left in your peak earning years.

Save more

This might sound obvious, but for some folks time is running out — and fast. If they keep spending at the rate they are going they wont’t have enough to retire comfortably. Start saving as much as possible. If you have an available 401(k) you should take advantage of it. Your employer could be matching your contributions and this could significantly increase your savings over time. If you’re self-employed, then take advantage of a CD or IRA. As much money as you can spare should be being set aside for your retirement. Overall, Americans have more than $1.2 trillion in personal savings. But 69 percent of adult Americans have less than $1,000 in a savings account and about 55 percent of those aged 45-54 have no savings at all. 

Prepare for Retirement

At age 40, retirement is suddenly a subject worth paying attention to, when it once seemed like a lifetime away. Take stock of what is important to you and then decide what is best for you in the years to come.

Whether you plan to downsize in retirement or keep your current lifestyle, you’ll have to be financially prepared for it. Ask yourself if you need the same size house or property. Selling a larger house that has equity in it frees up capital as well as lowering your monthly bills. You could also move to an area where living costs are lower. For some this could mean moving cities or states but some American retirees have even retired abroad. The Social Security Administration sends over half a million checks to Americans living overseas every month.

Quality of life in another country could be much better if their currency is worth less than the dollar or you just want to live out your years near a beach on the French or Spanish coast somewhere.

Pay off debt

The average credit card debt of U.S. families is over $6,000, according to the most recent data from the Federal Reserve's Survey of Consumer Finances, and the American median household consumer debt is at a much higher $67,000. 

Having debt hanging over you is not an ideal situation as you are paying off the amount with interest over time and this eats into the amount you could be saving for your future. It is important that the debt is at least paid down before retirement or you will be entering your golden years in financial handcuffs.

Doing these three things in your 40s will give you a good head start on your retirement plans.





Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associatesdoes not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 800-367-3000 Visit our website: www.davidlerner.com

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