Your 40s are a pivotal time to measure your financial health and ensure you’re in shape for the long haul.
At this point, you’re likely halfway between beginning your career and planning for retirement. This is the time to assess your finances and make sure you’re on the right path to meet long-term goals.
Following are some signs that you are doing well in your 40s.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
You have 3x your annual income saved for retirement
Many financial experts agree you should have approximately three times your annual income saved for retirement by the time you reach your 40s.
The number is not set in stone, but it’s a good yardstick for where you want to be. Include all assets — such as your 401(k) and cash savings earmarked for retirement — when determining this figure.
If you don’t have much saved for retirement, it’s time to start boosting your bank account. And even if you’re on track with your retirement savings, don’t stop now, as you still have a ways to go.
Your emergency fund is robust
Having an emergency fund equivalent to between three and six months of living expenses remains a priority in your 40s. If you’ve dipped into emergency savings, work on building the fund back up.
During this time in your life, you might also consider growing your emergency fund to cover an entire year of living costs.
You're out of debt or have a plan to get there
While you don’t necessarily need to be debt-free in your 40s, having a solid plan to get out of debt (including credit card debt and student loans) is essential as you get nearer to retirement.
You probably still have a mortgage if you are in your 40s. Some people at this age start paying down the loan aggressively with a goal of being mortgage-free by retirement.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
You have an estate plan and a will
Even by age 40, many people don’t have an estate plan or will. But that can be foolish. After all, you never know what tomorrow will bring.
Crafting a will and estate plan will help protect your assets and ensure loved ones have access to them. The last thing you want is for them to worry about money after you’re gone.
Creating an estate plan and will is especially important if you have young children. You want to make sure they have an appointed guardian and are financially secure.
You have life insurance
Generally speaking, the earlier in life you purchase life insurance, the less you will pay for it.
Life insurance does more than provide money for end-of-life expenses. It can cover the debts you leave behind (such as your mortgage) and provide much-needed funds to children for college or living expenses.
Trending Stories
You have disability insurance
You might already have disability insurance through your employer. If you don’t, you should consider signing up for it since it can help provide income if you're unable to work.
Self-employed individuals will need to secure disability insurance on their own.
Some employees also choose to purchase additional protection beyond what’s included in their employer’s benefits package.
You have a financial advisor
Some people shy away from financial advisors due to the cost. But the expertise an advisor provides is often worth the expense.
The decade of your 40s is an important time to make sure your finances are on track to meet long-term financial goals.
Financial advisors can help with your current investment mix or simply provide tips on getting started with investing.
You've made sure your career is on track
Your 40s are the perfect time to evaluate your career. If you don’t love your job — or aren’t earning a salary you’re happy with — consider making a change. Many people obtain higher salaries when they switch jobs or careers.
If you love your job and don’t want to work for another employer, consider asking your boss for a raise or trying to land a promotion.
You might also decide to start a profitable side hustle you are passionate about or look for another way to earn additional cash.
You've invested in learning to further your career
One way to further your career is to advance your education. A higher degree or specific certification might result in a significant salary increase.
However, you should always weigh any potential earning increase against the cost of higher learning. It's important to determine if the additional education makes sense financially.
Earn cash back on everyday purchases with this rare account
Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2
With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!
This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.
Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.
You have a plan to finance your kids' college
If you choose to pay for your children’s college education — or to help them with the cost — you need a plan to save money for that purpose.
There are many ways to save for your children’s education. They include opening accounts that are specifically designed for this purpose, such as a Coverdell Education Savings Account (ESA) or 529 plan.
Make sure you understand how these plans work, including any fees and restrictions that come with them. Then choose the option that works best for you.
You have a plan to become financially independent
Financial independence occurs when you no longer need to work for a paycheck. At that point, your investments and savings can pay for your lifestyle, and you're free to spend time doing other things.
Knowing how much money you will need for financial independence and setting a date to reach that goal can help you stay on track.
You might find it helpful to set short-term goals — such as contributing a certain amount to a high-yield savings account each month — on the way to the longer-term goal of achieving financial independence.
Bottom line
If you haven’t achieved the milestones on this list, now is the time to buckle down and make a solid plan to grow your savings.
Planning for retirement is a decades-long process. Even if you plan to delay retirement, things can happen that could force you to retire early. Health problems can arise, and life circumstances can change.
Meeting these goals in your 40s can better prepare you for the future regardless of what life throws your way.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.74%, 24.74%, or 29.74% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Want extra-cash moves to come right to you?
Stop browsing endlessly. Get proven ways to earn pocket money, help cover rent, and crush your debt — sent to your inbox daily.
Author Details