Savings strategies in your 40s and 50s
Saving money is a lifelong responsibility—one that pays off when you encounter an unpredictable emergency, whether its during your career or in retirement. People in their 40s and 50s need to consider a savings strategy that accounts for personal asset management in the present and retirement savings for the future.
A good financial foundation is critical no matter your age. Start by reviewing where you are now. Have you already made and updated a personal or family budget, created an emergency fund, developed a plan for paying down debt and established retirement savings? If you have, you’re in an excellent position. If you haven’t, don’t worry! You can begin making significant, positive gains moving forward with a close look at your financial picture. Chip away at goals using the savings strategies in each category and, when you’re ready, you can take them to the next level of savings. If you’ve already built this foundation of financial security, let’s look at how to continue to shore up your economic standing as you progress in your career.
Ramping up retirement savings For many, their 40s and 50s are a period of peak earnings, assuming a consistent career path and opportunities for advancement. MarketWatch suggested a variety of different strategies‡ to boost income, which can then be used to improve retirement savings and investments. You can consider everything from negotiating for a raise to applying for a promotion. You may also decide to start a second job or side business, or participate in the gig economy‡. The old savings standby of trimming unnecessary spending from a budget can also lead to more money to put toward post-retirement life.
Tackling debt No one wants to be caught dealing with excessive debt, whether it’s due to too much spending, high interest rates or both. That doesn’t mean all debt is bad — under the right circumstances, some debt can help your financial situation. Whenever you’re financing a new or used vehicle, an addition to your home or something else, make decisions with your long-term finances in mind. Seek out low interest rates and other favorable terms, think carefully about the value of what you’ll receive in return for taking out the loan, and do everything you can to avoid choices that leave you in a vulnerable financial position.
Adjust your budget as your life changes As you get older, your life circumstances can change significantly. From children moving out on their own — even if they still need a little help from their parents — to downsizing to a smaller home, many situations can lead to reduced spending. Make sure to adjust your budget and savings strategies accordingly to account for the increased or decreased discretionary income. Whether you want to put more money into your individual retirement account (IRA) or increase personal investments, make sure to leverage the extra funds. A financial partner can help you establish a savings strategy and secure and manage your money as your needs evolve.
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