Money Moves to Make in Your 40s

If you are feeling like your finances aren’t exactly where you want them, the good news is that you’re not alone–there are things you can do in your 40s to correct course. If you already have a good foundation laid in your 20s and 30s, it’s possible to further build on that and move forward with your money.

Here are some solid money moves to make in your 40s.


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1. Amp Up Your Retirement Savings

Your main long-term focus should be retirement. Yes, you might still be contributing to your kids’ college, but that shouldn’t be done at the expense of your retirement.

Now is the time to really look at your different financial priorities and adjust them. Make sure you’re on track for retirement. If possible, increase what you’re putting toward your retirement account. Even if it means reducing what you put toward your children’s college, you should consider boosting your retirement.

Anything you’ve already saved for your kids will reduce what they borrow in student loans (which they have time to pay back). Your window to save for retirement is rapidly closing.

In addition to what you might be contributing to an employer-sponsored plan, consider opening an account with Betterment to increase what you’re setting aside.

2. Review Your Social Security Statement

Every year, you should receive a Social Security statement. Chances are, you’ve mostly ignored it. Now, though, is a good time to start paying attention.

Your statement should include how many years you’ve worked, how many “credits” you’ve earned, and what your approximate benefit will be. Review this statement for errors. If you find problems, contact the Social Security Administration to get the mistakes fixed. You don’t want to miss out on Social Security benefits you’re entitled to.

Don’t forget, too, that you can sign up for an account at SSA.gov. This is an easy way to keep tabs on where you stand. Do that now, if you haven’t already, so you can start making plans.

3. Do Your Best to Become Debt-Free

This is the decade, where, hopefully, you can become debt-free (if you aren’t already). Try to create a plan that allows you to have your home paid off by the time you’re 50. Review your student loans and credit card debt. Can you have these items paid off in this decade?

Even if it’s not possible to have everything taken care of in your 40s, now is a good time to make a plan. Create a debt repayment plan and stick to it. That way, you’re making progress toward getting rid of your debt before you retire.

If you’re having a hard time putting together a plan, tools like Tally and Self (formerly Self Lender) can help you manage your debt and make a plan that allows you to move forward. Don’t assume you have to do it all on your own.

4. Research Long-Term Care Options

Now might be the time to research long-term care options. If you think that you might end up in a long-term care facility at some point, you might want to have insurance. Additionally, there are some annuity products that can be helpful.

However, you have to be careful as you look into these options. Some long-term care and annuity products are complicated and expensive–and won’t do you much good. Review your current savings level and your retirement portfolio to see where you stand. You might be able to cover all these costs without additional help.

Related: Should You Convert Whole Life Insurance to an Annuity?

If you decide one of these products is right for you, your 40s is the time to get started. You’ll have lower premiums and a better chance at a good long-term outcome when you start now. Just be very careful and seek a trusted professional to help you navigate the process.

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5. Have the Money Talk with Your Parents

This isn’t strictly about your money, but it is important. It’s not easy to sit down with your parents and find out what arrangements they’ve made for their own care and end of life. You need to know where they stand financially because you might have to help them and that could affect your own finances.

Know what estate planning provisions they have, including insurance, healthcare directives, and whether they have a plan for long-term care. Help them get their affairs in order, and be prepared to make some adjustments to your own plans if necessary.

Don’t Forget Your Own Estate Planning

While you’re talking about your parents’ estate plan, don’t forget your own end-of-life issues. Make sure you have adequate life insurance for your own dependents, in the event of an untimely death. You should also check to make sure you have your own power of attorney, will, and other documents in order.

Recommended: Trust & Will Review: Fast and Affordable Estate Planning

6. Review Your Beneficiaries

By the time you reach your 40s, there’s a good chance you’ve had quite a few life experiences.

Now is a good time to review your beneficiaries. Who’s listed on your life insurance policy? Who gets your retirement account after you pass?

No matter what’s in your will, your beneficiary information trumps it. So, if an ex-spouse is listed as your life insurance beneficiary, they’ll get the payout, and not your children. The same thing is true if you have an old investment account. Whoever is listed as the beneficiary gets the money–no matter who’s listed in your updated will.

Review all of your bank, investment, retirement, and insurance accounts and policies. Double-check your beneficiaries and make changes as necessary. Try to find forgotten accounts so your money goes where you want it to.

7. Keep Lifestyle Inflation in Check

Many of us see better earnings in our 40s, so it’s important to make sure that those extra earnings aren’t contributing to out-of-control lifestyle inflation.

There’s nothing wrong with enjoying your life. Go on vacation. Get a slightly bigger house. Spend a little more on eating out. If these things enrich your life, doing some of them isn’t going to be the end of the world. However, you do need to make sure you aren’t letting things get out of hand.

Don’t spend up to your new income. Instead, make sure you increase your retirement contributions and other savings as your income increases. Don’t let lifestyle inflation take over and eat away at your savings. Stay focused on your goals, track your spending with tools like Personal Capital, and make sure your spending is in line with your priorities.

Review Your Priorities

Speaking of priorities–now is a great time to review them. As we move through life, it’s possible that what matters to us changes. Life changes can also make a difference in your priorities. Take a look at what matters to you, and adjust your financial plan accordingly.

Bottom Line

It’s never too late to get back on top of your finances. If you’ve had some missteps, you can still correct them in your 40s. However, you are running short on time to properly prepare for retirement, so your focus is increasingly important. Be brutally honest about where you are right now, in relation to where you want to be, and make a plan to move forward from there.


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