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6 Financial Steps to Take in Your 40s

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Are You Ready for What the Future Holds?

One’s 40s can be a challenging time, financially speaking. While many 40-somethings are nearing their peak earning years, they may also face significant financial challenges, such as paying for children’s college educations, helping to cover the medical and/or senior living expenses of aging parents, and saving for retirement.

Fortunately, your 40s are also a great time to reassess your financial priorities and take the following steps toward a more secure financial future.

#1 – Reassess your financial priorities.

As you move through life, it’s important to periodically reassess your financial priorities to help ensure you remain on track toward achieving them. Many people experience significant lifestyle changes between their 30s and 40s. Your wealth manager can help you make any necessary adjustments to your strategy and investments to help ensure your financial plan continues to meet your ever-evolving needs.

#2 – Boost your retirement savings.

While you’re not yet on retirement’s doorstep, you are at a point where you need to be serious about saving for this important milestone. A great way to gain an understanding of the likelihood of achieving your lifestyle goals in retirement is to run projections based on several different scenarios. Your wealth manager has access to a wide range of tools to help with this.

If you identify any gaps in your savings, it might make sense to begin maxing out your retirement plan contributions, should your budget allow. A simple way to add to your savings is by making small, regular increases to your retirement plan contributions. Consider upping your contribution by 1% to 2% each year. You’ll be unlikely to feel the impact on your take-home pay, but those small increases can significantly enhance your retirement savings over time.

#3 – Understand your parents’ financial situation.

Depending on how openly you discuss financial matters with your family members, this may be a very simple or a very difficult task. Regardless, it’s an important one. Many people in their 40s find themselves in the “sandwich generation,” as they’re still caring for children at home while also tending to the health and well-being of their aging parents.

A recent study found that 32% of adults in midlife had provided regular financial support to their parents over the previous year, while 42% expect to do so in the future.1 These expenses can occur suddenly and unexpectedly if your parents suffer a health event or accident. If neither you nor they are prepared, these expenses could have a devastating effect on your long-term financial security.

If you’re uncomfortable discussing financial matters with your parents, your wealth manager can help facilitate a conversation and identify any challenges that should be addressed. It’s wise to have a basic understanding of your parents’ monthly income vs. spending, health and long-term care insurance policies, investment accounts and any trust/estate plans they have in place.

#4 – Create or update your estate plan.

Speaking of estate plans, if you don’t already have one, run — don’t walk — to your estate planning attorney’s office. Once you reach age 40, there are no more excuses — you need an estate plan. If you already have an estate plan, it’s wise to revisit it on a regular basis to help ensure it continues to meet your family’s ever-changing needs.

One benefit of working with Creative Planning is that our in-house estate planning attorneys collaborate with your wealth manager to develop and implement a custom estate plan that complements your overall wealth planning goals. Reach out to your wealth manager to get started.

#5 – Finish paying off debt.

If you’re still struggling under the burden of student loan or credit card debt, now’s the time to get serious about paying it off. Two effective strategies for paying down debt include:

  • The snowball method – This involves paying off your smallest debt balance as quickly as possible, then moving on to the next-smallest debt. The benefit of this approach is it can help you gain a sense of accomplishment as you knock out one loan after another.
  • The avalanche method – Using this method, you begin paying on whatever loan has the highest interest rate. Once that is paid off, you move on to the loan with the next-highest interest rate until all loans are paid off. This approach allows you to pick up speed as your go because each payment saves you more money than the one before.

#6 – Reevaluate your college savings strategy.

If your goals include covering the cost of college for your children, it’s important to remain informed on where you stand on the path toward reaching that goal. If your started saving when your children were young, you may need to consider making changes to your savings rate or investment allocation as your children near college. Your wealth manager can help you assess your progress and recommend any necessary changes to your strategy.

If you’re in your 40s and would like some help reevaluating your finances, Creative Planning is here for you. Our experienced professionals work to ensure every aspect of your financial life is well cared for and working to help you achieve your long-term goals. To learn more, schedule a call with a member of our team.


  1. https://www.aarp.org/research/topics/economics/info-2020/midlife-adults-providing-financial-support-to-family-members/

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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