five financial must-do’s in your forties.

Hello peeps!

While every stage of life presents you with opportunities to get ahead financially, your 40s are perhaps the most important stage for buckling down and getting serious. According to research done by PayScale, most of us reach their peak earning potential at the age of 40. Therefore, it’s incredibly important to make the most of this decade by outlining and achieving that next set of financial goals and priorities.

Not sure where to start? Try putting these items on your to-do list!

1. Really focus on those retirement years

Sure, you still have many more years of burning the midnight oil and participating in the daily grind, but you’re much closer to retirement now than you were a decade ago. In order to ensure you’re heading down the right path and preparing yourself financially, now is a great opportunity to really think about what you’re looking for out of your retirement years. How do you wish to spend that time in your life? Where would you prefer to live? What will your income and lifestyle needs be at this point? Spending time focusing on these questions now will give you much more time to prepare accordingly so that you can actually have a greater chance of turning these dreams into a reality.

2. Maximize your retirement contributions

While you may not have been able to contribute much to your retirement in those earlier years, your 40s is a critical time to ensure you’re contributing as much as you can. As those retirement years draw more and more near, it is so important to make sure you’re taking advantage of every opportunity to set aside and invest funds for that exciting life stage. If you haven’t taken a look at your retirement accounts recently, do yourself a favor and take ten minutes today to assess your progress. Can you make any adjustments? If you can, now would be a great time to increase you contributions ever so slightly. Give yourself every chance to grow those accounts as much as possible.

3. Increase funding for higher education savings plans

Though we often wish they’d stay little forever, alas, those little ones eventually will have to grow up and tackle life head first. If your children are considering attending university after high school, you’ll want to get ahead of this as early as possible by funding a university savings plan. If you already have one in place, it may be time to increase those contributions considerably as your children get closer to sending out those applications. The cost of a higher education isn’t getting any cheaper so be sure to check in on your progress and make any necessary changes in order to stay on track.

4. Avoid “lifestyle creep”

As you enter the peak earning years of your career, it can be tempting to use your higher salary to fuel your spending habits, rather than contribute more towards your savings and other financial goals. If your salary or earning potential has increased since you last established or visited your budget, now would be a great time to reevaluate your current needs and goals. How have your expenses, needs, and goals changed since you last updated your budget? If your income has changed, be sure to account for this and work to increase the percentage you dedicate to savings, rather than using the additional income only to fund your new lifestyle. While you might be making more money now than you were many years earlier, if you haven’t taken steps towards improving your overall net worth, then you may not be as far along as you think.

5. Get serious about your investments

If you dabbled in investing up to this point, good for you. However, now is the perfect time to dial up the investing a notch and get serious about your financial plan.  This is also a great time to rebalance your various portfolios and right-size your strategy based on your progress, your updated lifestyle needs, and more relevant goals. As you have aged, it is possible that your needs and priorities have changed, so it is critical to ensure your investments take these changes into account. Reevaluate your goals, your specific risk tolerance, and consider meeting with a financial professional who can help you create a customized plan for you. Also, make sure you’re taking advantage of both taxable and tax-advantaged accounts and are diversifying your portfolio accordingly.

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