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8 financial moves to make in your 40s

As you enter your 40s, you may experience some big milestones and lifestyle changes—especially if you have kids heading to college. Achieving financial stability for yourself and your family during these times is what you've worked for. 

8 Financial To-Dos in your 40s

At this point, you've hopefully paid off your credit card debt and student loans. With some of that money freed up, it's time to keep a close eye on your retirement funds. If you can, bump up your savings while continuing to pay down your mortgage if you have one. See the checklist below for your age group's top financial priorities.

1. Enlist the help of a financial advisor.

At any point in your life, finances can feel overwhelming, even intimidating, but working with an experienced professional can help guide you. If you haven’t met with a financial advisor by the time you reach 40, now is the time. A financial advisor can help you realistically assess the health of your finances and create an action plan for how to best move forward based on your current responsibilities and long-term goals.

2. Draw up or revisit a will and/or a trust.

A will can ensure that your assets are appropriately distributed based on your wishes. Whether you’re donating all of your money to a charity or if you’re married with children, you’ll earn peace of mind that your wishes will be filled and loved ones will be well cared for. Beyond drafting your will, consider whether your situation merits a trust.

3. Take advantage of retirement catch-up rules.

Funnel some of the money you're saving by being debt-free toward your retirement savings. If you can, maximize your 401(k) or IRA contributions. If you’re not able to invest as much as you’d like during your 40s, you can save even more each year once you turn 50 thanks to higher maximums designed to help people catch up on their retirement savings goals.

4. Invest wisely.

If you're able to use extra income to invest in stocks, take a look at your savings goals and their related timelines. These years are a prime time to grow your money, allowing for higher risk in your late 40s especially. Just make sure that you begin to reassess and deescalate your risk levels as you move closer to certain milestones.

5. Recheck your emergency fund.

Consider whether you should add extra padding. If your regular expenses have gone up, then so should your emergency savings.

6. Enjoy life but avoid lifestyle creep.

You may have more money at this point but keep your eye on the prize. For instance, don't compromise your long-term financial priorities by continually upgrading your home and car. After you've met your money goals each month, consider what you can stash away for a fun purchase—something you can mindfully splurge on, like a one-time experience or vacation rather than expensive ongoing spending habits.

7. Consider long-term care and long-term disability insurance.

At this point you don't want to derail your finances. So, be prepared. Learn how much long-term care can cost and consider how that would impact your financial plan. If insurance is the best way to cover any potential needs, then look into options provided by your employer—many companies offer supplemental plans as part of their benefits packages—or shop as an individual. Plus, enrolling now could save you money down the road. It might feel a little early for this step, but typically, the younger you are when you enroll, the lower your premium will be.

8. Check in with your parents.

Could they use your help now or in the future? Talk with them to make sure that their needs are met; they may need help managing finances, covering costs, or navigating health changes. The conversations may be challenging but preparing now will make it easier on both you and them whenever you do need to step into a caregiver role. 

Once again, as you move closer to retirement, consider working with a financial advisor. Ask for their professional guidance to help you plan and reevaluate your priorities as you near each milestone. Your 40s are primetime to envision and plan for your future. 

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