So, yesterday we covered what you need to have in place throughout your 20s and 30s to get set up for financial success throughout your life.

Let’s continue with your 40s and beyond – take notes because this list can get pretty extensive.

Your 40s – Getting Serious

  • You are in your peak earning years, so use this extra income to boost your savings.
  • Assess any major expenses, such as paying for your children’s post-secondary education. Can you truly afford to foot that bill? If not, there’s no shame in applying for an educational loan, or earning scholarships – or skipping the cross-country Ivy League school in favor of something more local. 
  • Do a full review of your financial situation now and make sure you’re on the right track. If you’re not where you want to be, don’t panic. You still have a few decades before retirement, so you can course-correct and catch up if necessary.
  • Get to know your magic number – the target amount you’ll need to live comfortably in retirement. You must know this number, or you will not know if your portfolio and savings will last you the rest of your life.
  • Reduce your debt load now as much as possible. Interest on credit cards and payday loans are a nightmare. This is arguably more important even than retirement savings because it’s costing you money now. 
  • Don’t play it too safe with your investments. You, of course, want to minimize your risk of losing money, but if your rates of return are too low (generally, the safer the investment, the lower the return), you risk going broke safely.
  • Get a financial advisor you trust and get your plan set in stone if you haven’t already. 

Your 50s – Getting Ready 

  • Retirement is potentially just 15 years away, so you must act now and get on track if you haven’t. 
  • Once you turn 50, you can set aside more in your 401(k) with ‘catch up contributions.’ Take advantage of this if you’re behind. 
  • Assess your assets and balance your portfolio. Experts usually recommend reducing risky investments like stocks in favor of ‘safe’ ones, like bonds. That said – don’t get too safe. Be diverse. 
  • To add on to my last point, consider having 2-5 years of living expenses socked away in a high-yield savings account before you retire so that you can leave your other investments alone in the event of a downturn. Obviously, this takes time, so start now. 
  • Start planning for healthcare costs. Medicare is helpful, but it’s got more holes in it than a fishing net (or, ahem, the plot of season 8 of Game of Thrones) – so you can not rely on it if you get sick. One major illness can and will decimate your lifetime of frugal planning if you’re unprepared. Healthcare costs are rising, and studies show that a senior couple might need hundreds of thousands of dollars to cover out-of-pocket expenses related to healthcare. You can weather these storms, but only if you fortify the house you live in.

Your 60s and Beyond – Reap What You Sow

  • First, congratulate yourself on a lifetime of hard work and intelligent planning. It’s finally time to cash in on all your preparation. 
  • Decide when you will actually be ready to retire.
  • Consult a financial planner to create a distribution strategy so that you can have a steady income without outliving your money. 
  • Ensure that you understand all of your income streams and create a budget. 
  • Plan when you will start collecting Social Security benefits. The earliest you can collect is 62, but that might not benefit you in the end – if you hold out to 67-70, your monthly payments will increase. 
  • Sign up for Medicare once you reach 65 if you don’t have enough coverage for illness.
  • If you live in a large home, consider selling it and downsizing. You could add the funds to your savings and move to a smaller home in a lower-cost area.
  • Rebalance your investment portfolio, and further reduce higher-risk stocks, in favor of bonds. If a downturn happens, you may not have time to recover from it, and it can hurt you in the long run, so plan accordingly.
  • Talk with your adult children about your end-of-life plans. A little grim, absolutely, but this is a must. Talk about their inheritances, your wishes for your healthcare if you’re incapacitated, and what you want your funeral to look like – then get it in writing. 

Your family will thank you later when they’re not squabbling over who gets what (trust me, this happens way more than you think, even in the most loving families because emotions are running high). Another side benefit is that they can ask questions, and you can help them understand your choices.

… Yes, that was a lot, wasn’t it! 

Here’s the thing, even if you don’t check off every point in my list at the ‘right time’, don’t stress out over it. You can still take action now and drastically improve your retirement prospects. 

If you want to have me look over your plan, book a chat with me by going online or calling 513-563-PLAN (7526). Let’s get in-depth on where you’re at now and what you need to do to get where you want to be in the future.

Regards,
Nikki Earley, CFP®