By the time someone has turned 40, they are likely to have achieved several life goals — a productive career, and possibly a house, spouse, and children. If you’re in your forties, you are familiar with and contributed to your employer’s 401(k) retirement plan. That’s a great basic step towards securing your retirement, but while you’re in your peak earning years, are you making sure you’re doing everything you can to leverage your retirement savings?
Here’s some top priorities for investing in your financial future in your forties.
It’s never too late to start investing
It’s not rocket science to know that the longer you can save and invest your money, the greater the return will be in your retirement (that is if you are smart with your investments). But the good news is that it’s never too late to start investing in your future. Even people who started investing later in life can achieve their retirement goals. Identify what’s important to you and your future, solidify your goals, and work with a financial advisor to develop a strategic investment portfolio to get you there.
Have children? Be strategic with college savings
If you have children in your 20s and 30s, you’re likely to be focused on the cost of raising them at that moment – diapers, food, childcare — children are costly and it can be hard to think of the future when wading through the new-parent fog. But if your child’s college education is important to you, the sooner you start saving for that expense, the longer it is for that money to grow. 529 college savings plans are an efficient way to save for college education costs.
While 529 plans are an excellent choice to save for your child’s college education, understand the penalties of withdrawing for nonqualified expenses. Also understand that while your child’s education may be important to you, student loans are always available should more funds be needed. The same can’t be said for your retirement. Find the right balance of saving for your retirement and meeting college savings goals.
Cut down on debt
Most Americans live with some kind of debt during their lifetime. From mortgages to car loans, debt is nearly unavoidable. But if you’re carrying an immense amount of consumer debt, it’s keeping you from reaching your financial potential and achieving your goals. Paying off debt can seem overwhelming and even impossible. Work with an advisor to help you make a plan of how you can tackle your debt. Making a plan and consistently sticking to it will have your debt shrinking in no time and free up that money for investing.
Optimize your taxes
Leveraging the tax benefits of your retirement accounts is one of the best things you can do for your investments. Understand the tax benefits of IRAs — both Roth and traditional — and determine which is right for your situation. Learn how other tax-advantaged accounts, such as a health savings account (HSA), can optimize your taxable income. Working with a knowledgeable CPA will ensure you are taking advantage of your investment accounts.
If you’re not where you’d like to be with your investments, don’t fret. It’s never too late to start or even change course. If you’d like some guidance on achieving your financial goals, we’re here to help. Contact us to set up an introductory meeting.