How saving money differs in your 40s, 50s and 60s
We already told you how your financial goals and habits vary from decade to decade in your 20s and 30s. The same is true as you move into your 40s and up until retirement. Here are some pro tips on how to take full advantage of each unique decade.
Things to DO in your 40s
Do meet with a financial planner to make sure you’re on the right track to retire when you want and with the right amount to continue living the lifestyle you want. Retirement may seem very far away, but you don’t want to let yourself be caught in your early 60s playing catch-up on your 401(k).
Do decide how saving for major purchases balances with your retirement saving. If you have children, are you going to pay for all or some of their college tuition? What about your children’s weddings? These are examples of things that can cause parents to be caught off guard and can put a pause on your important retirement saving. For more information on these decisions, take a look at our recent post on Kids’ college vs. retirement: where to save?
And one thing to AVOID in your 40s
Don’t miss out on the maximum match from your employer on your retirement plan. As we’ve recommended from your first job in your 20s, be sure to take full advantage of the match from your employer. Of course, going above that amount is also a great idea; just be sure you’re reaching that minimum amount to get your full match.
Things to DO in your 50s
Do think of this decade as your time to save the most (less expenses with children out of the home and typically higher income than you earned earlier in your career). Consider paying off high-cost debt, such as your mortgage, if you haven’t already and then save aggressively.
Do add catch-up contributions to your retirement savings. Even if you’re tracking well toward your retirement goals, you’re allowed to save more now, so do it!
And one thing to AVOID in your 50s
Don’t wait until your 60s to purchase long-term care insurance. The average age to buy this type of insurance is 57. If you wait until a few years later, it will be much more expensive.
Things to DO in your 60s
Do prepare aggressively for retirement…even before your planned last day of work. It’s difficult to predict when health, layoffs or extra time needed to care for your aging parents will cause you to retire earlier. This is the case with more than 40 percent of workers.
Do think about downsizing. This isn’t something that needs to wait until you’re already retired. If you’re single or if it’s just you and your spouse in your home, consider where you want to live for the next few decades and if moving makes sense.
And one thing to AVOID in your 60s
Don’t keep the same insurance policies you had in your 30s. You might not need life insurance anymore. Check your long-term care insurance policy to see what benefits it includes.
Remember, whether you’re 21 or 68, it’s never too late to improve your financial plan.
Inspired by a Daily Finance article
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Ms. Ponce is a Financial Center Manager for UMB Bank. She is responsible for managing the Collinsville micro-market. She joined UMB in 1991 and has 23 years of experience in the financial services industry.