David Lerner Associates: Financial Planning in your 40s

David Lerner Associates: Financial Planning in your 40s

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October is Financial Planning month so it’s a good time to take stock of your future goals and put plans in place.  These three resolutions should be on your list if you are in your 40s:

Beware of  financial complacency.  You may be entering your peak earning years, especially if both you and your spouse are working ad this could open up more financial opportunities  than ever before. The bad news, however, is that your financial obligations may also be at an all-time high.

If your earnings are at an all-time high, it’s all too easy   to enjoy the good life and put your savings on the back burner. For example, you might decide to buy a more expensive home (or even a second home) or expensive “toys” like an RV or boat, but not increase your savings rate.

Many financial experts say it’s OK to enjoy the fruits of your labor by splurging a little. But at the same time, you should also increase your savings rate. One of the best ways to do this is to save a percentage of your income, instead of a fixed amount, so it automatically rises along with your earnings.

Don’t try to do too much financially. The 40s actually represent a continuation of many of the same financial challenges and opportunities of the 30s. But a decade later, these challenges and opportunities may be even greater.

Many people in their 40s are trying to balance multiple and competing financial demands such as maintaining their current lifestyle, saving or paying for their children’s college educations, saving for their own retirement, helping care for aging parents, and maybe even helping support grown children who are suffering from long-term unemployment.

However, it’s important to remember that you probably can’t do everything. This requires setting some financial priorities. For example, some people in their 40s place a higher priority on saving for their children’s college than on saving for their own retirement, since college is looming nearer. However, other sources of financing may be available to help pay for college, such as scholarships, grants or loans. Unless you have a pension plan, there will be no other major source of financing for your retirement other than your own savings.

Keep a close eye on your debt. Excessive debt can be the biggest financial derailer for people in their 40s. This often happens as they try to increase their lifestyle to “keep up with the Joneses” or to juggle the myriad of financial responsibilities they face (as noted above) during this life stage.

Many financial experts suggest that individuals in their 40s attempt to pay down all of their debt except their home mortgage. Start with credit card debt, which is likely your most expensive debt. If you have debt on more than one credit card, focus on paying off the highest rate card first, and move on from there. Then focus on paying down other consumer debt, like car and other installment loans.

One strategy is to make it a goal to be debt-free, except for your home mortgage, by the time you reach 50 years of age. Then you may want to consider making extra payments toward your mortgage principal, which can potentially shave years (and thousands of dollars) off the cost of owning your home — and possibly enable you to own your home free-and-clear by the time you retire.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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