13 Signs You’re Doing Well Financially When You’re Over 45

Could you be more financially secure than you realize?

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Updated June 11, 2024
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Reaching your mid-40s is a significant milestone, often marked by reflections on personal and professional achievements. At this stage, it's crucial to evaluate your financial health to ensure you're on the right path toward a secure retirement.

If you haven't assessed your financial situation yet, now is the perfect opportunity. Retirement may be just around the corner, and being prepared is key to enjoying your golden years without financial stress.

Here are a few signs you’re doing well financially when you’re over 45.

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Your emergency fund can last at least six months

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Having an emergency fund that can cover at least six months’ worth of expenses is a clear indicator of financial stability. This fund acts as a buffer against life's unexpected events, such as medical emergencies, job loss, or major home repairs.

It allows you to handle unforeseen expenses without dipping into your savings or going into debt. If your emergency fund is robust and readily accessible, and you're earning more on your savings, you're well-prepared to face financial surprises.

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Your 401(k) is in the six digits

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A six-figure 401(k) balance is a strong sign you're on the right track for retirement. Regular contributions to your 401(k), especially if your employer offers a matching program, can significantly boost your retirement savings.

This account should be growing steadily, thanks to both your contributions and the power of compound interest. If you’ve reached a six-digit balance, you’re building a solid foundation for a comfortable retirement.

You have an IRA in addition to a 401(k)

Vitalii Vodolazskyi/Adobe retirement account IRA form on desk

Diversifying your retirement savings with an Individual Retirement Account (IRA) in addition to a 401(k) demonstrates proactive financial planning. IRAs offer additional tax advantages and investment options, enhancing your retirement portfolio.

Having both types of accounts indicates you're serious about maximizing your retirement savings and taking full advantage of tax-advantaged investment opportunities.

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You’re maxing out retirement contributions

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Maxing out your contributions to retirement accounts, such as a 401(k) and IRA, demonstrates a strong commitment to your future financial security. 

The IRS sets annual limits on how much you can contribute to these accounts, and reaching those limits means you’re taking full advantage of tax-deferred growth opportunities.

For tax year 2024, individuals can contribute a maximum of $23,000 to their 401(k) and $7,000 to their IRA. Workers over age 50 may contribute an additional $7,500 to their 401(k) and an additional $1,000 to their IRA.

You’re debt-free or have a manageable level of debt

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Being debt-free or having manageable debt levels is a strong indicator of financial health. This includes paying off high-interest debts like credit cards and maintaining low balances on any remaining loans. 

If you've eliminated or significantly reduced your debt, you're in a better position to save and invest more of your income, further securing your financial future.

You regularly review and adjust your budget

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Regularly reviewing and adjusting your budget to reflect changes in your financial situation shows that you’re actively managing your money. 

This habit helps ensure you're living within your means and allows you to allocate funds toward savings, investments, and other financial goals. A well-maintained budget is a cornerstone of financial success and adaptability.

Your credit score is excellent

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An excellent credit score opens doors to better interest rates on loans and credit cards, saving you money over time. It also reflects your ability to manage credit responsibly.

If your credit score is high, it indicates you have a solid history of paying bills on time, keeping debt levels low, and managing various types of credit effectively. Generally, an excellent credit score is 800 and above.

You have multiple income streams

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Having multiple income streams, such as rental income, dividends, or a side business, enhances your financial stability. Diversified income sources can protect you against the loss of a primary income and provide extra funds for saving and investing.

If you have multiple income streams, you're reducing your financial risk and increasing your wealth-building potential.

You have a comprehensive insurance plan

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A comprehensive insurance plan, including health, life, disability, and long-term care insurance, is essential for protecting your financial well-being. These policies safeguard you and your family against significant financial losses due to illness, injury, or death.

If you have adequate insurance coverage, you’re mitigating potential risks and ensuring unforeseen events don’t derail your financial plans.

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You have a diversified investment portfolio

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A diversified investment portfolio that includes a mix of stocks, bonds, real estate, and other assets reduces risk and enhances potential returns. 

Diversification helps protect investments from market volatility and economic downturns. By having a well-diversified portfolio, you’re managing risk effectively and positioning yourself for long-term growth.

You’re on track with your retirement goals

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Regularly assessing your progress toward your retirement goals ensures you’re on the right path. This includes calculating your expected retirement expenses, estimating your future income, and adjusting your savings and investment strategies as needed.

If you’re on track to meet your retirement goals, you’re likely to enjoy a comfortable and financially secure retirement.

You have an estate plan in place

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An estate plan, including a will, power of attorney, and health care directives, ensures your wishes are carried out, and your loved ones are taken care of after you’re gone. Having an estate plan in place is a sign of responsible financial planning and provides peace of mind.

You’re actively pursuing financial education

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Continuing to educate yourself about personal finance, investments, and retirement planning shows you’re committed to maintaining and improving your financial health. 

Staying informed about financial trends and strategies helps you make better decisions and adapt to changes in the economy and markets.

Bottom line

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Assessing your financial health regularly, especially as you approach retirement age, is crucial for ensuring a secure future. 

How do you measure up against these signs of financial well-being? If there are areas where you need improvement, now is the time to take action and secure your financial future.

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Author Details

Adam Palasciano

Adam Palasciano is a personal finance-obsessed and money-savvy individual who loves to hash out content on all things saving money. He specializes in writing millennial-friendly personal finance content, covering topics ranging from trending financial news, debt, credit cards, cryptocurrency, and more.