Steps to Take as a 40-Something

Financial Advice For Every Decade:
Steps To Take As A 40-Something

Congratulations on arriving to your 40’s! You may have children spreading their wings a bit, finishing up their high school years and moving on to college. Your own parents may be in a position where they need you a little more than they did in years past. You may have settled into a steady career and are making moves to climb the ladder, stepping into positions of leadership and authority at your place of employment. Because of this, work may be more stressful than it has been in previous decades.

The good news is you are likely still healthy, and now you have a large, well-established social and professional network. This decade should offer the stability you need to prepare for the ever nearing milestones that come with age. You should consider many of the following items as you evaluate your financial standing and well-being.


We tend to have more responsibilities at this stage of life, and if possible, should strive for a strong emergency fund to effectively manage the challenges that may arise. Roof leaks, work transitions, and family challenges can be larger now, so you may need more money to correct whatever comes up.

Many financial gurus would suggest an emergency fund in the range of three to six months of your expected expenses. Check with a financial advisor to see where they might suggest keeping this necessary cash reserve, but in general keep it in an account that is liquid enough that you can reach the funds quickly and easily.

An emergency fund will help keep you from being knocked off your financial feet when life inevitably counter punches with an unexpected event. You don’t want to be caught entirely off guard, and a well established emergency fund will provide a much needed safety net.


Mortgages and car payments are often necessary parts of our lives, this is the time to knock them down as much as possible. It will be more difficult to maximize any savings goals, specifically for retirement or children’s college if you carry debt in these areas.

Credit card debt should not be part of the equation if at all possible. Plan on paying any balance off at the end of each month. As you likely know, this type of debt is particularly bad due to the high interest rates. 


Your job can provide you with many things, but when the rubber hits the road, the benefits associated with your position are one of the most significant factors.The first step here is to ensure that you are privy to all of the benefits offered by your employer. Each company or employer will have a unique set of offerings, and hopefully they have done their due diligence in making you aware of the advantages of the offered benefits.

 Two of the most common employer benefits are health insurance and a 401k match.

Typically your full time employee status will qualify you for health insurance through your employer. In some cases your family may be included in this plan or you may have to search elsewhere for their coverage. Your experience as a parent has likely taught you that children are especially prone to accidents sometimes resulting in unexpected medical events. Avoid dipping too deep into your emergency fund by making sure you have adequate health coverage for all the members of your family.

If your employer offers a 401k match, always contribute at least to the point that your employer will match. If you do not contribute the required amount to receive the employer match, you are leaving money on the table. Here is a resource that will help you understand how 401k matching works or reach out to a financial advisor. Make sure to ask these questions any time you are dealing with a financial advisor to determine if they will act in your best interests. 


Check with your employer first. Often times they will offer a plan that gets us the coverage needed at great pricing. Additionally, your employer may offer the chance to purchase extended coverage at a discounted rate.

Your ability to earn an income is one of your most significant financial assets to you and your family. Because of this, life insurance and disability insurance are crucial pieces of your financial plan and wealth protection strategy. Disability insurance will come into play if you become unable to work. It will replace income that is lost due to illness or injury. You likely know all about life insurance, but it would be remiss if we did not touch on its importance. Life insurance is not for your benefit, but for the family that depends on you for financial support.

Although this topic is not particularly enjoyable to discuss, it is important that you are well prepared. The peace of mind knowing that your family will be cared for in your absence will pay dividends now. 


It is hard to be excited about this topic but if you have a family it needs to be addressed. You spend time planning a vacation or planning what to cook for dinner, so it follows that you should also plan who will inherit your assets and care for your children after you are gone.

An estate plan allows you to proactively make decisions. It will ensure that your wishes will be carried out and your family will be cared for in a manner in which you approve.

Another benefit of an estate plan will be the potential to reduce estate taxes. Through some simple methods, individuals are able to reduce or possibly eliminate estate taxes. Your estate plan will help to make the inheritance tax bill more manageable for your family.


There are fewer guidelines when it comes to saving for children’s college. The factors that will determine the cost of your children’s education vary wildly, but undoubtedly the cost of education will continue to rise. If you started when your children were still young, their college savings has grown along with them. This is a great start! As our children grow closer to heading off to school, it is time to reevaluate where you stand.

This article outlines an order of operations for saving for children’s college as well as detailing some important factors to consider along the way. There are a variety of educational savings accounts, the most common being the 529 Plan. This type of savings will have tax advantages, so it makes sense to start here. These plans only cover educational expenses. This means if you wish to help in other areas where non-educational expenses will occur, it would be wise to save in a traditional savings account as well. You should consider an online savings account with a higher interest rate than your traditional savings account at a local or regional bank. Even this small change could make a difference in the total when the time comes, and it will also be much easier to give and control the access for your children. 


You have now had nearly two decades of a professional career, and your retirement account has likely reached the point where you have accumulated a significant level of assets. The additional complexity could require the help of a financial advisor. Make sure you work with an advisor who operates under the fiduciary standard, which means that the advisor must put your interests ahead of their own.

Up until this point, your retirement strategy has likely been to save as much as possible at every point possible or perhaps you have lacked any intentional strategy. Either way, now is the time that you should hone your focus. You should establish an official plan to ensure you retire on time and fully funded. Use a retirement calculator to determine exactly how much you will need when the time arrives.

A long-term focus is the most important part of your investment management strategies. If you operate under this mindset, you will reduce the level of stress associated with your portfolio. Doing this will improve your financial health as well. In our 40s, we still have the opportunity to extend our time horizon which can improve the performance results of our portfolios. Day to day, there is no telling what markets will do. Over a 20 year period though (likely as you close in on retirement), you will likely be better off than you are now.


You have amassed experience and expertise in your 40+ years on earth. Your children are nearly grown, and life may have the stability that you craved in years past. The consistency of each day is not exciting. Your 40s are the happy medium between the youthful, transitional 20s and the career-focused, stressful 30s. Because of this, now more than ever, you have the ability to pass on your wisdom to those around you. Your children may not want to hear what you have to say, but they desperately need it. The younger professionals around you would greatly benefit from your input and advice as well.


The road ahead may be the same length as the road already traveled, but time will seem to pass much more quickly going forward.  Enjoy the ride!

           – Jon Timson

Share Article: