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Planning & Economy

Prepare for Retirement and Maintain Financial Security

September 5th, 2023

Investors in their 40s

You made it to the 40s. And hopefully, you have spent part of your 20s and your 30s building the foundation of a solid financial path. Now it’s time to start thinking about how you will achieve your longer-term obligations, dreams, and lifestyle, such as retirement and college funding. Saving for retirement and college is most likely becoming foremost in your thoughts. Still, in your 40s, the financial planning and decision-making around these goals should start taking priority and getting traction.

Action 1- Have all unsecured debt paid off so that you can maximize your savings plan

Your retirement will most likely encompass 30 years or more. You will probably work another 25 years or so. During this time, saving as much as possible in your retirement plan is essential. Continuing to pay for unsecured debt directly comes off the top of your potential savings plan. Ensuring this debt is paid off as soon as possible will be important when propelling your savings plan to the next level. You also may have kids in middle or high school, so having a more detailed plan on how you want to pay for college or after-high school graduation expenses will be necessary.

Action 2- Reevaluate your current mortgage

Are you going to be staying at your home for a while longer? If so, be sure that your mortgage is working to your benefit. As I’m writing this piece, mortgage rates have risen from where they were a couple of years ago, but they are still lower than most student loan rates and credit card rates. If you still have some unsecured debt at a high-interest rate, it may make sense to refinance at a lower mortgage rate to pay down your unsecured debt. You could also shorten the term of your mortgage to match the retirement age you are planning for in your financial plan. For example, if you have 28 years left on your mortgage but plan to retire in 20 years, it may make sense to refinance (for a lower interest rate than you currently have) and shorten the term of your mortgage to have it paid off by the time you retire.

Action 3- Visualize your retirement

Although retirement is still far off for most 40-year-olds, it’s time to visualize what retirement looks like so that you are appropriately preparing over the next 20-25 years. Many retirees are finding that they may want to transition from their current full-time job to another, less stressful job to continue to work and stay busy. You may want a clean break at retirement; for some, they want to phase out slowly. What about you? What will you do with your time when you fully retire? Will you volunteer, travel, and spend time with your grandchildren? What’s your ideal retirement look like? It’s essential to have an idea to appropriately plan what you need to save for retirement now and how to invest your portfolio to get you to your retirement goals.

Action 4- Reevaluate your estate planning documents and your beneficiary designations

I recommend reevaluating your estate planning documents every 2-3 years and reviewing your beneficiary designations annually. Life changes, and it’s important to be sure your estate planning documents accurately reflect your wishes and your financial and family situation. The same for your beneficiary designations. Who do you have listed on your employer retirement plan, your life insurance policies, and your IRA accounts? Be sure that your beneficiaries are correct and that your beneficiaries listed are still the best person/people to receive your assets if something were to happen to you.

Action 5- Have a college payment plan in place

Based on your current income and your current savings in place for college, you should be able to have an idea about putting a plan in place on how you want to pay for college. Will your children be responsible for helping to pay for part of their college? Will you use your savings plus normal cash flow to fund college? Do you have limitations on where your children can attend school – in-state, public versus out-of-state, or private? Attending college may not be the best education alternative for your children: This is also an excellent time to have those conversations about your expectations regarding college or their after-high school graduation plans.

Action 6- Talk to your parents about their longevity and their care plans

At some point, you could be making decisions on their behalf. Do your parents want to stay at home during their senior years, live with you, or live in a retirement community? What is their financial situation, and do you need to play a part in their care later in life? Knowing these details is vital because it could be important to your overall financial plan and how and where you save your money.

Action 7- Build a team

At this stage of life, it’s crucial to have your advisors and professionals in place to help you through these tough decisions. If you haven’t already, this is the time to start working with a financial advisor, an estate planning attorney, and an accountant. Establishing these relationships earlier rather than later will benefit you and your family. Work on getting everyone on the same page: Which is helping you plan for your long and short-term goals. Please let us know if there is anything we can do to help you.

Christina Jones
Wealth Manager, RFJS
Partner, Windsor Wealth



401k plans are long-term retirement savings vehicles. Withdrawals of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2 , may be subject to a 10% federal tax penalty.
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