Investing for Life: Time for a mid-course adjustment?


As you approach the 40-something age bracket, you may find yourself caught among conflicting financial crosscurrents. From career pressures and unplanned interruptions to child-rearing and aging parents, it’s easy to lose sight of your own long-term savings goals.

With that in mind, here are five tips on where to invest your efforts to keep your financial goals on track regardless of any near-term distractions.

TIP #1: Invest in debt reduction. “At this point in your life, you do not want to create more debt,” advises Lillian Meyers, CFP®, CDFA™, EA with Meyers Financial in Sonoma, CA. “It can diminish your quality of life and possibly affect your employment prospects.”

It can also be downright expensive. Carrying personal debt is basically anti-saving. By the time you are in your forties, you should have retired your credit card debt and student loans or be very close to doing so. Ideally, you should also be working toward paying off your mortgage. The reason: it allows you to live more comfortably on a reduced income. Also, owning your home outright provides you with more options and opportunities in retirement, including being able to turn your home equity into a supplemental source of retirement income if need be.

TIP #2: Invest for the long-term. Now is the time to invest more seriously than in the past. You probably have enough assets—especially if you have participated in an employer’s retirement plan—that you should be paying more attention to allocation and diversification across different types of investments. With 20-to-30 years to go until retirement—and another 20-to-30 years in retirement to plan for after that—you should maintain a long-term perspective, and not default into investing too conservatively. At the very least, your main objective should be to earn rates of return that keep up with the rate of inflation on an after-tax basis.

TIP #3: Invest in yourself first. “Keep paying yourself first by funding a 401(k), IRA, or any other form of savings that will help get you were you want to go,” urges Meyers.

Though most parents want to be able to save their children from student loan debt, financial professionals generally agree that retirement savings should have the higher priority. While there are numerous options for funding the expense of a college education, no one will give you a loan to help you pay for retirement.

TIP #4: Invest in insurance coverage. If you are like many workers, you already receive some life insurance and disability insurance coverage as part of your employer’s benefits plan. Review that coverage to make sure it is sufficient, especially if your income is vital to supporting your family. Later in life, insurance may not be a necessity—once your savings are sufficient—and it can be reduced or eliminated based on your circumstances. But during your prime working years, it is generally worth maintaining adequate coverage, whether you have to pay your own premiums or not.

TIP #5: Invest in your health. Many financial plans are upended by premature retirements due to poor health. To maximize the options you have regarding when and how you retire—and increase the probability of experiencing a higher quality of life when you do—it makes sense to do what you can now, to reduce your risks and health-related expenses later in life.

TIP #6: Invest in a financial check-up. “Get an assessment on where you are versus where you want to end up,” advises Meyers.

At this point in your life, you already have an abundance of interests and commitments competing for your attention. Letting a professional help you develop—or update—your financial game plan will save you time and energy in the short-run, and is likely to pay off in the long-run as you realize your goals.



About Author

Gayle Ronan

Gayle B. Ronan is a senior copywriter at a marketing and communications expert, specializing in financial services. She has a substantial publication history as a writer/journalist specializing in financal, personal finance, lifestyle and small business feature articles. These articles have appeared regularly on and in magazines including Worth/Robb Report and Bloomberg Wealth Manager.

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