Financial Tips for When You Are in Your 40’s

Financial Tips for When You Are in Your 40’s

In every stage of life, there are different steps that can and should be taken to help maximize your retirement nest egg. Each year and life event bring about financial changes that should be monitored to ensure that when you hit retirement age, you will be financially secure. By the time many people have reached their 40s, they have some sort of retirement plan in place, but it may be the right time to start taking some extra savings steps. Here are a few things you can do in your 40s to help that retirement plan stay on track.

For a large portion of the population, the first move they ever made towards planning for the future was starting a 401k through their employer. This is a great way to get started, but once you start creeping closer to retirement age, it is important to make sure you are maximizing this benefit.  Employers will usually have a plan in place in which they will match an employee’s 401k contribution annually. Employees may pick a lower amount to start with contributing, but later in the game, it’s wise to take full advantage and add as much to your 401k plan annually as your employer will match. Your employer is basically giving you free money for retirement, why not take advantage? Now this doesn’t mean you can’t max out your contribution as soon as you start a 401k, just be sure that what you are taking to put toward retirement does not put a financial strain on your current day to day life.

Having a 401k in place is essential, but having other retirement plans and investments to supplement your 401k is priceless. The age of retirement, according to the U.S. government, is constantly on the rise, and for many people, ever seeing social security benefits may be an urban legend. As time ticks on, it becomes essential to be less dependent on government-controlled benefits for retirement.  There are numerous retirement plans and investments, such as stocks or mutual funds, to choose from that could become streams of income later in life.  It is important to understand how the different retirement plans work and to pick at least one that is tax-free. A financial advisor can help you determine which plans work best for you now, and for where you plan to be at retirement age; not to mention they can help manage multiple accounts and investments to make it less stressful for you.

While this next tip is for people of any age, because “now” is always the perfect time to pay off debt, it is even more important as you get closer to wanting to retire. Looking over your financials and finding ways to pay off debt faster can make a huge difference in your financial future. Continuing to pay interest on credit cards or loans is throwing money away; you might as well put a pile of cash on your front porch and set it on fire.  Keeping in mind, a mortgage is not a debt you need to stress about paying off as fast as you can – it is an investment in equity (it is a good idea to plan on having this paid off by retirement though).

To keep from creating any more debt, your 40s can be an ideal time to build up cash reserves. As we all have learned by this point, life is unpredictable and things come up when we least expect them to, and these events are generally not cheap.  Creating an account with funds that are easily accessible and liquid is a safe financial move in the chance that you ever face losing your job or some sort of medical or household emergency. Using these funds instead of a credit card will also keep your debt in check.

Finally, your 40s is a perfect time to review your insurance situation. From home insurance to health insurance, to life insurance, it’s time to make sure your family is safeguarded against any unforeseen life events. Many people in their 40s have young children, and caring for them would become much more difficult if a spouse was suddenly unable to work, or even worse, passed away. If your family could no longer count on your contributions, would they be financially stable?  Having insurance policies to fall back on in these instances can be crucial for many families.


Financial planning is something that many people put off for a wide range of reasons.  Don’t waste any more time – contact the financial advisors at The Hopman Group and let them help you get on track for your future.