Financial Planning By The Decades: When You Are 40
BOSTON (CBS) - Today we look at the third book in this series, Your Money Life: Your 40s by financial author Peter Dunn.
Your 40s is the decade when everything is on the line, from houses and cars to insurance, retirement, college funding, and the impending mid-life crisis. Dunn is sure that there is no decade of life in which your financial decision-making can have such far-reaching repercussions for your future.
Changing your financial habits and direction in your forties can be a challenge, but since the forties is your make-it-or-break-it decade, taking control of personal finances in these years is critical.
The elementary question of this decade if you have children is "should college savings or retirement funding get my money?" Dunn goes on claiming that your financial habits are already formed and changing direction no matter how necessary is like steering the Titanic.
If you manage your finances correctly during this decade you will be able to retire in your 60s. Screw it up and you will be still working in your 70s.
According to the author as you approach the big 50 you will want to accomplish the following goals:
- Establish and contribute to a college fund for your kids. (My take on that is that a college fund should have been started when the kids were born.)
- Be sure your own student loans have been paid off.
- Each year increase your contribution percentage to your retirement plan & work toward contributing the maximum allowed.
- Avoid making new debt commitments.
- Save at least 20% of your income.
- Pay off your home or at the very least make a plan to have it paid off pre-retirement.
These are not lofty goals. These truly are common sense goals which will reap you big rewards.
