Financial Milestones – For Those in Their 40’s

By Mitchell J. Smilowitz, CPA

In your 40's, you probably have new financial responsibilities – mortgage and family. To meet these responsibilities, it is important to focus on your long-term financial plan. Here are some important financial decisions and actions you should consider taking during this period.

  • Assess Your Financial Situation: Take a close look at your current financial status, including savings, investments, assets and debts. Understand your net worth and your monthly cash flow. This will help you gauge how well you're positioned for retirement. Seek professional financial advice to get personalized guidance tailored to your specific financial situation and goals. Contact the JRB for a Complimentary Financial Consultation to get started.
  • Review and Adjust Your Retirement Goals and Savings: Determine your retirement lifestyle and goals; there’s a good chance they have evolved since you were in your 30’s. What will it cost to live the lifestyle you want? What activities do you plan to undertake? Having a clear vision of your retirement needs will guide your financial planning. There’s a good chance you’ll want to increase your contributions to your JRB retirement account.
  • Diversify Your Investments: In your 40's, it's important to diversify your investment portfolio to manage risk. Consider a mix of asset classes that align with your risk tolerance and financial goals. Sample investment portfolios offer some general direction. Regularly review and rebalance your investments to ensure they remain aligned with your objectives. Target Date Funds perform this task automatically for you.
  • Plan for Your Children's Education: If you have children, start planning for their education. Explore tax-advantaged college savings plans such as 529 plans and Coverdell Education Savings Accounts to save for your children’s future educational needs.
  • Manage Your Debt: Assess your current debt situation and develop a plan to pay off high-interest debt, such as credit card debt or personal loans. Prioritize paying down debts while simultaneously saving for retirement and emergencies.
  • Evaluate Insurance Coverage: Review your insurance policies, including life, health, disability, property/casualty and long-term care insurance. Ensure that your coverage is adequate to protect you and your family in case of unforeseen circumstances.
  • Create or Update Your Estate Plan: Prepare or revise important estate planning documents such as wills, trusts, health care proxies and powers of attorney. Ensure your beneficiaries are up-to-date and reflect your current wishes. Start by reviewing the complimentary, state-specific estate planning resources available from the JRB. Consult with an estate planning attorney for guidance on complex matters.
  • Continue Learning and Growing: Assess your career trajectory and consider whether additional education, training, or career advancement opportunities can enhance your earnings potential. Seek ways to increase your income or explore alternative sources of income to improve your financial situation.
  • Maximize Tax Advantages: Take advantage of tax-advantaged accounts, such as your JRB Retirement Account, Health Savings Account (HSA) or Flexible Spending Account (FSA). Consult with a tax professional to optimize your tax strategies and ensure you're making the most of available deductions and credits.
  • Update Your Emergency Fund: If your financial obligations have grown, you may need to increase your emergency fund so it still covers three-to-six months' worth of living expenses. This fund will provide a safety net in case of unexpected financial setbacks, such as job loss or medical expenses.

Everyone’s financial situation is unique, so it's important to evaluate your needs and make informed decisions. Taking these financial actions in your 40's can set you up for a more secure and comfortable future. Request a Complimentary Financial Consultation from the JRB to discuss how you can manage your current financial goals with the long-term in mind.

February 2024