The 40s and ’50s may be the turning point for most people – where they take advantage of opportunities to save and build wealth.
By the time you hit this age, you probably already cleared some if not all of your financial obstacles. You are way beyond the stage of being bold in your 20s and building a career and family in your 30s. You have a more secure job and probably starting to save enough money for you and your family.
But reaching the 40’s is where people also experience the phenomenon, “The Sandwich Generation” where they have conflicting feelings on how much to financially support children and parents. On top of that, retirement.
So how do you do navigate your money in your 40’s and 50’s?
Well, life is easier when you have good financial skills, and we gather seven (7) things you need to know to help you financially plan for your future.
1. Ratchet up your Savings in your 401K and IRA Contributions
Use this time to invest as much money as you can so that you can take advantage of compound interests. Funnel your extra cash into your retirement savings. Make sure you are contributing enough to your 401K to get the full benefit from an employer and max out your ROTH IRA for tax-free withdrawal of your retirement.
2. Dial Back Your Financial Risk Tolerance
Now is not the time to make risky financial investing decisions. Take a look at your allocations and work with your money manager to find out how to best invest for retirement. Remember that your financial moves will significantly affect your future, and there is not much time left to make for the lost savings.
3. Invest in Long-term Care Insurance and Life Insurance
Long-term care insurance can get expensive, like really expensive, and it can rapidly drain down your retirement savings if you are not prepared to spend $212 a day or higher for nursing home care, so to avoid that, invest in a long-term care policy now that you can still get a decent quote that will cover your stay at a care facility in the future. Same with long-term care insurance, this is now a great time to invest in life insurance or renew your policy if you already have one. The fund that goes there will fill in to take care of your dependents should anything happen to you.
4. Talk to Your Parents About Their Money Affairs
Stepping up and helping ease the burden of your parents can be stressful, but there are several ways to support them without sacrificing your savings. Talk to your parents and make plans for what you can do to help them.
- Help them downsize or relocate
- Ask them to move in
- Help with the repairs and maintenance
- Create a budget for them
5. Get your Estate in Order
If you don’t have a will yet, it is better to make one now. It is to protect all your amassed assets, and dispose them of in any way, and to distribute them to people you prefer.
6. Learn a New Skill
Learning a new skill not only improves your brain function, but it keeps you relevant, increases adaptability, opens more opportunities, and helps you earn more money in the future.
7. Start a Side Gig
As you draw nearer to your retirement, having a side gig that can be another source of income is a good idea. Establish a business that you can work on and polish now that even after you quit your job in the future, you’ll still have money in your pocket. It will help you save more and reach your financial independence.
Save your children from feeling the need to support you through your golden years, and do yourself, and them a favor by properly managing your accounts and setting up for retirement.
We discussed what women over 40 need to know about money and estate planning on Episode 12 of the Gurl U R Not Alone Podcast.