When you hit your 40s, you’re at crossroads. You’re looking back at twenty-odd years of hard work and gazing into retirement horizon. The last decade or two to retirement can take a fast turn. Taking care of your financial health and simplifying your finances early guarantees a blissful retirement.
The ithoughtplan checklist to navigating your forties:
- Max out Retirement Contributions
- Insure & Feel Secure
- Zero Debt
- Budgeting & Disciplined Spending
Maxing Out Your Retirement Contributions
In your 40s many financial goals will compete for your attention. You will juggle commitments like sending your kids to college, saving up for a wedding, paying off your home loan, and planning for retirement at the same time. The easy way out is to postpone retirement planning and deal with imminent goals. But this strategy rarely works. Finding out in your fifties that you don’t have enough to retire is a bitter pill to swallow and an easy situation to bypass. All you need is a financial plan!
Prioritising your financial goals, spacing them out, and maxing out retirement contributions will get you to a better place. Besides, starting early ensures that your money compounds and you don’t have to do all the heavy lifting.
Paying Off Your Loans Faster
Getting to zero debt can leave you with a sense of accomplishment and relief. More importantly, when your EMIs stop, your money is free to serve you in different ways. The key is to avoid new long-term loans. Here are three tips to quickly pay off loans:
- Negotiate the best possible rate with your bank
- Make extra payments every month
- Shorten the term of your loan
How would your family cope if you weren’t around to pitch in financially? You must insure your life for their sake. Insurance hedges your family from financial insecurities that may arise in your absence.
At the peak of your career, you are eligible for maximum life insurance. You should structure your life insurance policy to provide for future financial goals, outstanding liabilities, and income replacement.
Lock into a solid health insurance policy early and accumulate no claim bonuses. The benefits of health insurance in your 40s often outweigh the costs. Health insurance premiums will increase as you age. Remember that they prevent out-of-pocket expenses and ensure that you handle medical emergencies with ease.
Budgeting & Disciplined Spending
Understanding your inflows and outflows will bring more clarity to plan your finances. You could save more without earning more if you just monitor your expenses and follow a budget. A rupee saved is worth as much as two rupees spent.
Your discretionary expenses like eating out, entertainment, shopping, etc. will pop out at you. Awareness on where and how you spend your money is a healthy sign towards creating a perfect financial future. Disciplined spending allows you to choose what’s best for you in the short run and the long run!
When you’re able to save more in your forties, you create flexibility. You could become financially ready to retire early, you could provide more towards your financial goals, and you can handle contingencies with ease.
The focus of financial planning in your 40s should be bringing stability. You can do this by optimising retirement contributions, insuring your biggest assets – your life and health, paying off loans, and increasing your savings potential.
Capitalise on your success in your 40s. Accumulate more wealth and stay true to your goals and financial priorities with a customised ithought financial plan!