Many people in their 40s are well into their careers and looking forward to a retirement that’s less than two decades away. With that said, it’s wise for people in this age bracket to review their finances and ensure they’re on track for retirement and other financial goals. Here are four ways people in their 40s can be money smart.

1.  Work with a financial advisor

When someone is young and in their 20s, they can invest aggressively in stocks and ride out the ups and downs of the market. However, individuals in their 40s may need to be more strategic about how they invest. With retirement getting closer, the last thing they want to do is jeopardize the integrity of their nest egg.

This is where working with a financial advisor can be a smart move. A good financial advisor will take a holistic view of their client’s entire financial situation and make customized recommendations. This won’t just be for portfolio growth but also for other long?term benefits like wealth preservation and tax efficiency.

2.  Start maxing out retirement plans

Depending on how long a person in their 40s plans on continuing to work, they may have a solid 20 years or so of saving opportunities in front of them. That’s a long time to continue making contributions and leverage the compound interest effect so that those investment gains multiply several times over.

The best possible way to do this is for a person to max out the retirement plans. Because retirement accounts like a 401(k) and IRA are tax?advantaged, they’ll pass less to the IRS and keep more in their nest eggs.

3.  Become debt?free

As someone in their 40s starts thinking down the road toward retirement, it will be helpful to eliminate as many debts as possible. One of the biggest heavy hitters to focus on is their mortgage. For example, an individual who pays off their mortgage early might reduce their monthly living expenses by $1,500. That one effort can allow them to reduce their nest egg savings target by as much as $450,000 (using the 4% Rule as a guideline).

4.  Get a life insurance plan

People in their 40s who don’t already have life insurance should consider getting a plan soon. Life insurance plans become increasingly more expensive the older people get. On top of that,

individuals may find that as they start to develop health problems, this may lead to even greater premium increases or potentially not getting approved at all. This is why someone who’s in relatively good shape should apply for a policy, lock into the best rate possible, and help give peace of mind all the way into retirement.

5.  Plan for the next phase

Although people in their 40s may not be completely ready for retirement just yet, they can start to see it on the horizon. In this situation, it can make sense to start thinking about how they will replace their working income and begin making withdrawals from their retirement accounts in the most tax?efficient way.

At the same time, this can also be a good opportunity to begin taking steps toward solid estate planning. These might be actions such as setting up a revocable living trust so that assets can be passed on to beneficiaries outside of probate. Again, a good financial advisor should be able to help provide proper guidance.

The bottom line

People in their 40s are getting closer to retirement, and so that means taking steps to make sure they’re ready. Good steps to take are to max out their retirement accounts, become debt? free and get life insurance if they haven’t already. At the same time, they should also connect with a good financial advisor and start making some serious plans for that next big phase of life.

Coverage is underwritten by Aflac.

In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, and Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400 and Riders: ICC1368050, ICC1368051, ICC1368052,

ICC1368053, ICC1368054, ICC1368055. This is a brief product overview only. Coverage may not be available in all states, including New York. Benefits/premium rates may vary based on plan selected. Optional riders are available at an additional cost. The policy has limitations and exclusions that may affect benefits payable. Refer to the policy for complete details, limitations, and exclusions. For costs and complete details of the coverage, please contact your local Aflac agent.

The content herein is provided for general informational purposes and is not provided as tax, legal, health or financial advice for any person or for any specific situation. Employers, employees and other individuals should contact their own advisers about their situations.


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