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5 Retirement Hacks for 40-Somethings

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Retirement Planning

Personal Finance

October 15, 2021

You’ve worked for half of your life.

During these working years, you've probably done some saving and investing. You’ve also probably taken on some major expenses, such as a home, student loans, or having children. Your accounts may not reflect how much you've achieved at this point in life.You’re not alone! Many people lived paycheck to paycheck for a stretch of time, did not invest at all in their 20s, or made poor spending decisions along the way, creating concern at the 40-something mark. Or, maybe you are happy with how much you've saved but want to ensure you are doing everything possible to secure your future.Either way, you’re not too late to make changes. Here are five hacks that you can put in place in your 40s to enjoy your retirement years comfortably.

‍Plan to eliminate your debt as soon as possible.

‍Debt comes with high interest, so it must be paid off as soon as possible. The average rate is around 16 percent these days and some credit cards are much more. Make a plan to get it paid off as quickly as you can, even if you have to make short-term spending sacrifices. You may be able to buy time by taking advantage of a no-interest balance transfer offer period. Getting your debt paid should be a top priority in your 20s.

‍Make YOURSELF a priority.

‍If you’re like many 40-somethings, you may have children, a full-time job, and you may even be caring for elderly parents. If you’re putting all additional income into college savings accounts, for example, rather than consistently adding to your retirement accounts, consider readjusting. This may be the first time you have the income or wealth to help others in your life, but this shouldn't supersede your current and future financial needs. Preparing for retirement, and investing in yourself, should not be at the end of your investment list, especially in your 40s.

‍Take full advantage of a 401k, IRA and employer match.

‍If your employer offers a 401k and you’re not taking advantage of it, sign up – today. Many employers today offer a matching percentage, which means you should be investing at least that percentage. This matched amount really will make a difference in retirement. Also, after you’re contributing enough to reach the matched amount, then max out a Roth IRA if you can. This type of account means tax-free money when you retire. Then, if you have extra money to invest, you can consider other savings or investing options. If you are a small business owner or solopreneur, speak with a trusted financial advisor about your retirement-saving options.

‍Don’t invest as though you’re nearing retirement.

‍You might feel like in your 40s, you shouldn’t be risky in your portfolio. It is a common reaction for those who think they don’t have enough to want to move money into bonds or income funds to preserve it. In reality, you may be 20 or 25 years from retirement! Therefore, you should still consider higher-risk investments to generate returns and see your money grow. This is an ideal point where the help of a trusted financial advisor can truly make all the difference in your financial future.

Don’t panic! Get a plan and put it in place.

‍Do not listen to claims that you must have three times your annual salary in your accounts by 40 to retire comfortably. With job instability, inflation, market volatility and other unexpected life events like divorce, many are finding themselves starting over in their 40s. It is never too late to get on track. If you haven’t made much progress towards retirement, create a budget, monitor spending and consult with a professional for a long-term customized plan. Then, take advantage of every opportunity to save, invest and stick to your plan.

If you need a holistic financial plan, or if you already have one, it is always a good idea to meet with a financial professional. If you want to make sure you’re on track to reach your retirement goals, please schedule an appointment on Bayntree’s online calendar by selecting the date and time that is most convenient for you! You can also always reach us by emailing info@bayntree.com.

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Bayntree Wealth Advisors provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.

‍Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.

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