Financial Advice for 40-somethings

Most financial advice and financial blogs tend to be catered to people in their 20′s and 30′s. While this probably reflects the underlying demographics of readers, it also neglects those over 40 who tend to have higher incomes, more assets, thus more investment choices, and investment questions.  I was chatting with three friends this weekend, all of us women in our 40′s, here are some things that we discussed that all of us are facing:

–Maximize earning power as much as possible – for most people, the 40′s are a good time for high income generation.  Usually, most people have their studies and degrees completed, have moved into middle-management or upper management areas and have yet to succumb to age discrimination from the workforce.  For those contemplating early retirement (pre-65), this decade is a good time to really accumulate retirement accounts.

–Prioritize retirement savings — this is hard.  The 40′s are also typically what’s called the sandwich time, when you are sandwiched between financial obligations for kids, possibly caring for elderly parents, paying off a mortgage, and medical expenditures.  It’s easy in all of this for retirement savings to be bumped down on the priority list, which is problematic.

–Prioritize good health — these days, health expenditures, from health insurance premiums, medications, and medical bills are a large chunk of most peoples budgets.  Unfortunately, premiums will be higher for 40-somethings than 20-somethings, but keeping as healthy is good, both financially and in so many other ways.  Diet, exercise, and proper sleep are all part of the health protocol. Be sure to have regular checkups including dental for good maintenance.

--Be sure your asset allocation is appropriate — most people had too much allocated to stocks going into the 2008 market downturn.  On the flip side of that, it has been reported that a lot of people divested of stocks and are keeping their savings in CDs or bonds.  Obviously diversity is good, as well as having assets that can stay ahead of inflation.

shared at this week’s Carnival of Personal Finance