5 Financial Mistakes People Make in Their 40s (And How to Avoid Them)
Your 40s are a financial crossroads. You may be earning your highest salary yet, but you’re likely juggling big expenses, including kids, mortgages, aging parents, and more. It’s easy to get caught up in the day-to-day and overlook your long-term financial health.
Here are the top 5 financial mistakes we see people make in their 40s, and what you can do to avoid them.
Delaying Retirement Savings (Still)
If retirement planning hasn’t been a priority, now’s the time to get serious. Many working professionals in their 40s are still not contributing enough to retirement accounts.
Our tip: If you’re behind on your 401(k) and IRA contributions, don’t panic, but do act now. Use compound interest to your advantage by starting now, and remember that catch-up contributions kick in at age 50.
Prioritizing Kids’ College Over Retirement
It’s noble to want to help your kids avoid student debt. But doing so at the expense of your own retirement can backfire.
Our tip: Remember, you can borrow for education, but not for retirement. If you’re actively saving for retirement and have cash flow to put towards education, prioritize 529 plans or other tax-advantaged savings vehicles that don’t derail your long-term security.
Letting Lifestyle Creep Take Over
As income grows, so do the temptations: a bigger house, a nicer car, luxury vacations. This lifestyle inflation can quietly erode your financial future.
Our tip: Be intentional about spending increases and ask yourself whether new expenses align with your financial goals.
Ignoring Debt Strategy
Credit cards, student loans, and even your mortgage can be manageable, or they can snowball. Without a strategy, you may end up carrying unnecessary interest for years.
Our tip: Create a plan to aggressively tackle high-interest debt first. Consider refinancing, consolidating, or using windfalls to pay down balances faster.
Skipping Insurance and Estate Planning
Many people overlook life insurance, disability insurance, and estate planning, especially if they feel “too young” to consider it.
Our tip: Ensure you have adequate coverage to protect your family in the event of an unexpected occurrence. Draft or update your will, and ensure all beneficiary information is current. If your children are too young to inherit funds or you want to minimize the burden of asset distribution on your heirs, create a trust.
Final Thoughts: Take Control in Your 40s
The good news? You still have time to course-correct. But the intentionality starts now. The choices you make in your 40s will define your financial stability in your 50s, 60s, and beyond. Avoiding these 5 financial mistakes can make all the difference.
If you need help navigating your financial future, connect with us today to build a strategy tailored to your goals and lifestyle.
Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.