Aggressive Moves You Can Make In Your Forties To Reach Your Long-Term Financial Goals | SB Elder Law

Aggressive Moves You Can Make In Your Forties To Reach Your Long-Term Financial Goals

An article in Kiplinger discussed an aggressive approach to financial planning in your forties. Let’s take a look at some of the highlights.

Make saving for retirement a priority and beef up your investments.

You’ll want to start by making the largest possible contributions to your employer’s retirement plan. At the very least, you should put enough into your company’s retirement plan to take full advantage of its contribution matching program.

A word of caution—if you put all your retirement savings into tax-deferred accounts, you might get hit hard by taxes when you retire. That’s because withdrawals from 401 (k) plans and traditional IRAs are taxed at the retiree’s ordinary income tax rate. This makes contributing to a Roth IRA a good idea. Your contributions are after-tax, but your withdrawals are tax-free as long as you are over 59½ and have owned the Roth IRA for five years or more.

It is important to note that employees in lower tax brackets are typically better off diverting some of their savings to Roth IRAs and other taxable accounts because the benefit of tax deferral is not as valuable as it is to those in high tax brackets. Conversely, if you are in a high tax bracket, you should contribute as much as possible to tax-deferred accounts. This is because when you take withdrawals in retirement you will likely be in a lower tax bracket.

Here are three additional ways people in their forties can maximize their retirement savings.

Don’t skimp on your retirement savings to pay for your children’s college education.

Why? Simple. You or your children can borrow money to pay for college, but you cannot borrow money to pay for retirement. In addition, when investing for retirement, time is indeed money. The more you can invest early on, the greater the likelihood that you’ll have more money when you retire. Also, working longer, say well into your sixties, may not be an option. Corporate downsizing and/or health problems could limit how long you can work. The fact is, saving more than you need for retirement will allow you to help pay off your children’s student loans when you do retire.

Make the most of what your employer is offering. 

Your employer may well be offering more than a paycheck. For example, some companies match employee contributions to health savings accounts. Others offer retiree health benefits, pensions and more. Taking advantage of employee benefits like these can help you build additional wealth and provide for a greater sense of security in retirement.

Pay off your debt logically. 

Sure, it would be great to retire without a mortgage. You would eliminate one of your greatest expenses, which in turn could allow you to withdraw less money from your retirement savings during market downturns to pay for unforeseen expenses.  However, in your forties there may well be better ways to use your money, particularly if you have a low interest mortgage. For example, it’s better to pay off debts with higher interest rates, such as credit cards or vehicles. Then, if you have money left over, you could make extra mortgage payments. Consider this: on a 30-year mortgage, if you make one extra monthly payment a year, you will knock four years off the term of your loan.

To learn more about planning strategies for people in their forties, you can read the entire Kiplinger article at

Author Bio

Julianna Malis is the Founder and Managing Partner of Santa Barbara Estate Planning & Elder Law, a Santa Barbara estate planning law firm she founded in 2014. With more than 25 years of experience practicing law, she has dedicated her career to representing clients in a wide range of legal matters, including estate planning, elder law, Medicaid and Medicare planning, probate, and other estate planning areas.

Julianna received her Juris Doctor from the University of the Pacific — McGeorge School of Law and is a member of the California State Bar Association.

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