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Financial Planning in Your 40s: Your Top 4 Priorities

It’s never a bad time to give your finances a health check. And if you’re hurtling towards middle age at what feels like breakneck speed, stop for a moment and consider the future.

The time spent on sound financial planning in your 40s could be one of the smartest investments you ever make.

Our 40s can often be when we feel a stronger sense of security, having years of experience behind us. So, read on to discover more about why giving yourself a midlife financial checkup is such a wise move.

Why a Midlife Financial Checkup is Important

Some might feel the pull of a brand-new sports car during a mid-life crisis. A better option, however, would be to weigh up our financial fitness and conduct what amounts to a personal financial audit.

Once you know where you stand financially, you can make appropriate adjustments to ensure your future security. If you are in your 40s, you are likely to be at the peak of your earning potential. You may also have a work-life routine that includes a stable income and expenses. This will help you focus on what the next year or ten years could look like.

Questions To Ask Yourself

To get a clear picture of where you stand on your financial journey in your 40s, you should begin by asking yourself a few questions. These will give your current situation perspective and help you develop a plan for the future. Here are some questions to get you started:

  • Do you currently have a mortgage or mortgages?
  • Are there likely to soon be major changes in any aspects of your life?
  • What are your biggest expenses in descending order?
  • Do you have credit card debts or other outstanding loans?
  • Would you like to move jobs if you could?
  • Do you need to boost your working hours due to starting a family?
  • Do you own a small business, or do you have plans to start one?
  • If you have children, do you pay school fees, and are there extras to pay for?
  • Do you have any elderly parents who may need aged care in the future?

It’s worth spending time assessing the entirety of your financial picture. Sometimes the use of financial modelling software can assist the process. Our Launceston financial planning team can help here so, if you are unsure or need to discuss your situation in greater detail, don’t hesitate to get in touch.

It’s quite normal to sometimes feel overwhelmed by the future and how you will fund your lifestyle when you are no longer working. This is one of the reasons so many people put off thinking about retirement.

We’ve broken down financial planning in your 40s into four easy-to-understand steps. Here’s where to put your focus for your midlife financial checkup.

1.   Keep Track of Your Superannuation

Other than owning your own home, your super may be your biggest financial asset.

A quick super health check could significantly boost your retirement savings. You should understand your investment options and your risk profile.

It’s also vital to know if you have several super accounts that you could consolidate into one. By making a few tweaks here and there, you could soon be on a winning streak.

You should also investigate the life insurance included in your super account and work out if you need to make any adjustments. We know that super may not be in your top ten thrilling topics to consider. That’s where PAC Financial can help. We are superannuation experts and can show you how to make super a match for the financial goals you have for the future.

2. Give Your Retirement Savings a Lift

Many professionals find that their 40s end up being their most profitable earning years. This can be especially true for those who’ve been in the same job for a substantial length of time or who have gone back to work after starting a family or taking a career break in their 30s.

There is plenty of evidence to suggest that those aged between 45 and 54 make up the age group that takes home the highest levels of pay. There’s no question that your 40s and early 50s are a critical time to take a hard look at financial planning for retirement.

For instance, you may wish to divert more of your income into your superannuation to capitalise on compound interest. You may be able to do this through salary sacrificing, for example. It’s a simple way to build your super up during your peak earning years and it has the bonus of potentially reducing your tax bill at the same time.

Talk to one of the PAC Financial team to find out what your superannuation options are and how you could give your retirement savings account a boost.

3. Beware of Lifestyle Inflation

Your 40s may be a time when you feel financially established and secure. The temptation can then be to spend more than is wise. It’s relatively easy to develop habits that may stretch your budget too far financially.

In a sense, it’s possible to enjoy the present a little too much rather than secure your future. It’s all about coming up with a sensible balance that allows you to perhaps take the odd luxury break without sacrificing the financial stability of your later years.

4. Scale Up Your Investment Portfolio

If your 40s are likely to be your peak earning period, it makes sense to come up with a fresh investment strategy.

You may be considering opening an investment portfolio or boosting your current level of investment. Either way, talk to a financial adviser who can source and explain the different investment options. They can help you match these to your financial goals and risk tolerance.

It’s crucial to make sure your investments match your short, medium and long-term financial objectives. The key message here? Always get professional financial advice!

Launceston Financial Planning in Your 40s

If you’re financial planning in your 40s, PAC Financial can help. Our Launceston financial planning team is at the ready to help you. Start your midlife financial checkup today by booking a timeslot with one of the PAC Financial team.

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