If you’re in your forties, you’re probably juggling a lot—career, family, maybe a mortgage, likely hitting your peak earning years and definitely thinking about retirement.
The 40s are often called the “sandwich generation” years. That’s because people often find themselves simultaneously supporting their children (sometimes including college expenses) while having to assist aging parents. Add in mortgage payments, career pressures, and your own retirement planning, and it can begin feeling overwhelming.
As a financial advisor, I’ve seen firsthand over the years how proper planning during this decade can seriously impact your long-term financial health. This is the time to get your financial house in order-here are the top tips to help you do just that.
Budget for Balance
Budgeting isn’t just for the young or broke—it’s for everyone. A simple yet effective rule is the 50/30/20 budget:
50% of your after-tax income goes to needs (like housing, food, and transportation), 30% to wants (like entertainment or travel), and 20% to savings and debt repayment.
There are lots of online tools and apps to help you track spending. You can also just use a basic spreadsheet. This will help make sure your money works for you, not against you.
Supercharge Your Retirement Savings
Ever wondered how much you really need to retire? If you haven’t sat down to assess this yet, you’ll want to estimate if your savings, plus Social Security, and any other income in retirement you expect will cover your retirement expenses.
Get familiar with your investment options—401(k), Roth IRA, traditional IRA, etc.—and check that your asset allocation matches your risk tolerance.
Plus, if you haven’t been maximizing your retirement contributions, now is the time to get serious. Your 40s are a critical saving period with enough time for investments to grow substantially before retirement. Consider increasing your 401(k) contributions, especially if you’re not already taking full advantage of any employer match.
A rule of thumb I like to recommend is to aim to have at least three times your annual salary saved by age 40.
Create a $0 Debt Strategy
If you’re carrying credit card debt, it’s time to get serious about paying it off. High-interest debt can derail your financial goals faster than you think.
By your 40s, you should have a clear plan for eliminating credit card debt, student loans, and other high-interest obligations. This doesn’t mean you need to be completely debt-free, but you should be strategically reducing what you owe while prioritizing investments.
Use the “debt avalanche” method: focus on the debt with the highest interest rate first while making minimum payments on the others. Once that’s paid off, move to the next highest, and so on.
Build an Emergency Fund
We all know that life tends to throw curveballs at us, and having a safety net can save you from financial stress.
In your 40s, aim to have 6-12 months of living expenses set aside. Once you’ve got your emergency fund, you can redirect other savings toward retirement. Think of it as your financial “just in case” fund—it’s there for unexpected car repairs, medical bills, or even a job loss.
Protect Your Family’s Future
Life insurance and an estate plan aren’t the most exciting topics, but they’re important.
Now is a great time to review your insurance coverage which includes life insurance, disability insurance, and potentially long-term care insurance. In your forties, term life insurance is relatively affordable, so don’t put it off.
An estate plan ensures your assets are distributed according to your wishes and can include wills, trusts, and powers of attorney. Doing this will ensure your family’s security is in place.
Plan for Your Children’s Future
One smart way to save for college is to set up or contribute to a 529 plan. A 529 plan is a tax-advantaged savings account created specifically for education costs—think tuition, books, or even room and board. These plans provide flexibility, allowing you to change beneficiaries if needed and potentially receive state tax deductions for contributions.
That said, here’s something I advise clients: your retirement savings should take priority. There are plenty of ways to finance college, like loans or scholarships, but there are no loans for retirement.
The Bottom Line
Financial planning isn’t a one-time event but an ongoing process that should evolve as your life changes.
Whether you’re right on track or playing catch-up, thoughtful planning and action now will pay dividends for decades. But the most important thing is to start.
Are you ready to retire with confidence?
Book a no-obligation initial call to see how we’ve helped hundreds of clients craft a personalized retirement plan that’s uniquely you.