Your 40s can be a wake up call, whether it’s the girth that’s suddenly around your waist, or your children who are no longer babies, time marches on, and it’s no time like your 40s to get serious about planning for retirement. With every year that passes, you’re one more closer to leaving behind the daily grind.
"You are entering both your peak earning and spending years. Staying disciplined in saving for retirement is critical and it can be easily sidetracked by temporary wants," says Reginald A.T. Armstrong, president of Armstrong Wealth Management Group.
Maybe you’ve been meaning to join the 401(k) at work, or to start an IRA, "do not pretend you are still young and have plenty of time," warns Bijan Golkar, vice president and senior advisor at FPC Investment Advisory.
Here’s a must-do list for that all-important decade for retirement planning -- the 40s.
"Define your retirement. Think about what it looks like, where you’ll spend it, what you want to do. Now that you’re in your 40s, you’ll have a better idea of what you want it to look like and can therefore better plan for it," says Chris Hogan, a financial advisor.
Acknowledge what it will take to get there and what you’re willing to sacrifice to get there, says Hogan. Realize that knowing and doing are two different things. Activate a plan of action to start to make progress toward your goals.
Ramp up savings
Bite the bullet and find a way to max out your 401(k). "If you’re in your 40s and not doing everything you can to maximize contributions to a 401(k), especially if your employer offers a match, then you haven’t create a financial plan and are not off to an adequate start in preparing for retirement,’ says Dennis Brier, president of Fairwater Wealth Management.
Attempt to bump up your 401(k) contributions 1% every three to six months advises Katie Brewer, a certified financial planner with Your Richest Life.
Work on getting rid of all your consumer debt. Begin to accelerate extra payments on your mortgage. "Despite the fact that you might think you could do better investment wise, eradicating debt by your mid 50s should be a big target for those in their 50s," says Ted Jenkin, founder of oXYGen Financial.
Being debt-free in retirement is about as good as it gets. It’s a goal worth pursuing given the payoff – financial freedom.
Talk with your parents
With your parents now aging, you’ll need a few heart-to-heart conversations about their finances. Will they need your financial support? Will other siblings be able to pitch in? If you could potentially be a caregiver, the sooner you plan the better it will be not only for them, but you, financially and emotionally.
Protect your assets
If you don’t already have life and disability insurance, you can ill afford not to at this life stage. Furthermore, while you’re thinking about end of life issues for your parents, consider long term care insurance for yourself. It’s far less expensive to purchase in your 40s compared to a decade later.
Take care of yourself
Your biggest asset in retirement will be good health. Get serious about taking care of yourself. Exercise and eating right will go a long way toward helping to ward of disease that can not only be a financial burden, but impact your quality of life. Get a physical. Says Jenkin, "Your health is in part, what helps you drive your income."