Financial Planning in Your 40s - Adviser Investments

Financial Planning in Your 40s

November 5, 2019

With age comes greater wisdom, they say, and greater responsibility. You’re well-established in your career and hopefully earning more than you spend. You may have your own family as well as aging parents you’re looking out for. In addition, you’re now halfway towards traditional retirement age. That’s a lot to manage—and financial planning can help. Here are five tips to strengthen your financial foundation during your 40s:

  1. Protect Yourself. You can’t put a price on peace of mind. Disability insurance can help protect your income if you are unable to work. Life insurance can help provide for your loved ones if you pass away. Health insurance is an absolute necessity. Homeowners insurance is also key. And consider a personal umbrella liability policy that is roughly equal to your growing net worth.
  2. Focus on Retirement Savings. If you aren’t already doing so, it’s vital to begin contributing at least 10% of your pre-tax income (or up to the annual limits if you can afford it) to your retirement savings accounts (e.g., 401(k), IRA, etc.). Yes, you can include any employer contributions. Consider bumping up your contribution percentage every time you receive a raise.
  3. Invest Outside of Retirement Accounts, Too. Participating in your employer-sponsored retirement plan is important, but don’t lose sight of those short- and mid-term goals that you’ll be spending money on before age 59½. Consider contributing to a brokerage account to grow a portion of your savings above what you’d earn in interest with a bank account. If you have children, give us a call about setting up a 529 plan for those future educational expenses.
  4. Talk to Your Parents About Finances. Your parents may be nearing or in retirement. Now is a great time to have an honest discussion with them about their plans and their finances to get a better understanding of whether you may need to provide some support in the future. For more information, listen to our recent podcast on the topic.
  5. Create a Financial Plan. As your financial situation becomes more complex, it’s even more important that you have a clear view of your assets, liabilities and broader financial status. A well-designed financial plan will give you that, and we are available to help build your plan.

Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

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