In Your 40s? Here are Some Financial Planning Tips for You

A person in their 40s could be a late baby boomer or a proud member of Generation X. Whatever their generation they fit in, this is the time between saving for children’s college tuition and saving money for retirement. However, it is not the time to ignore financial planning Mankato MN.

Start Financially Planning by Building Up Cash Reserves

The first strategy in financial planning building up cash reserves via an emergency fund. It is vital to have three to six months of income on hand in case of an emergency such as job loss or illness. Put it in an account that is safe and easy to get to in an emergency. Have a second account for planned expenses. Some surprises really don’t surprise people like a broken furnace or income taxes. They just happen at a bad time. Set aside money in a savings account for this “bad moment” expenses.

Continue Financial Planning by Reducing Debts

Medical bills, credit card debt, student loans and the list continues. There is no shortage of debt. The important thing is to prioritize these debts to reduce the amount owed. This will help an individual put more income into their savings than paying off debts each month.

Make Employer Pay by Maxing Out Employee Benefits

By the time a person reaches their 40s, they need to match their employer contribution in their 401(k). It doesn’t matter whether they are making any profit on the 401(k) or not. The money doubles because their employer matches the amount they put into it.
Not all employers have the same retirement plan so do some investigation. Find out how much money to contribute and maximize that contribution.

Make a Separate Retirement Plan from the Employer’s Plan

Start a separate Roth IRA or traditional individual retirement account. This choice should depend on the person’s income. A Roth IRA makes sense for tax purposes. However, it is best to research to determine the best option.

Start Saving for Children’s College Tuition

It is never the best option to depend on loans and grants that may not be around in the next decade to pay for college tuition. Depending on their age, it is time to save for their college years. Begin with a 529 plan and try other college saving options too.

Provide Insurance for the Family
People in their 40s need insurance. Life insurance is vital because no one can predict the future. However, with child care and other expenses, paying for life insurance often gets overlooked. So, protect the family by buying life insurance.

Get Help with Planning for Retire with the Help of a Financial Planner

Every president since Bill Clinton has told late Baby Boomers and Generation Xers not to rely on Social Security for retirement income. Unfortunately, it is possible that the money won’t be there. It’s never too late to start working with a financial planner and understand more about planning for retirement.