8 Ways to Get Financially Fit in Your 40’s (Part 2)

For part two in our series on building your financial future, we will discuss some key strategies for ensuring you aren’t left in the lurch come retirement time. With just a few money maneuvers, and time for growth, you can get your cash working for you. The key is to start soon and contribute often. But where should you put your hard earned income and what added protections can you enact to keep your investments safe?

5) Protect Your Income With Disability and Life Insurance

What would you do if you were unable to work for one month? Some families would be ok, while others would crash and burn halfway through the month. Regardless of how much money you have set aside for a rainy day, it’s always good to add a little extra cushion for peace of mind. And, the more your family grows, the more important it becomes to secure your income in the event of a disability.

No one ever really believes the unthinkable could happen to them. But, according to the Council for Disability Awareness, a 35-year-old male in good health has a 21% chance of being out of work for at least 3 months due to a disability. A healthy female has a 24% chance of becoming disabled short-term.

The best way to secure your family’s future financially is to invest in life insurance and disability insurance. Many employers offer disability insurance for a very reasonable premium. If it’s offered to you, take it.

Life insurance, however, is typically best purchased as an individual plan. Employer-based policies are limited in coverage and you can’t take it with you when you leave the company. An experienced agent can help you identify your family’s unique life insurance needs and assist you in finding an affordable policy.

6) Start a College Fund

If you have children, the necessity for a college savings fund will more than likely rank fairly high on your list of financial to-dos. Education is and always will be a critical tenant of success and we all want the best for our kids. By starting early on a savings plan, you will contribute a smaller amount overall in relation to your end results.

7) Construct Your Financial Dream Team and Discuss Regularly

Many financial advisers recommend knowing your worth and having it in writing. Sit down once a year and write a net worth statement. Review your annual statement line by line with your financial planner. Come up with a financial strategy and update it annually, checking to see how far you’ve come and how far you have left to go.

It’s also important to consult with your spouse or significant other once or every other month to ensure you’re on the same financial path. Consider your expenditures and where you can better allocate your funds. This can also be a chance to make reminders about upcoming annual bills and renewals, schedule payments or delegate responsibilities. Planning ahead, even a couple months, can prove beneficial for both short and long term financial stability.

8) Retirement Savings Begin Today

It’s never too early to begin saving for your retirement, as the level of financial freedom you’re afforded in your golden years directly correlates to what you’re putting aside right now. It can be a challenging endeavor, though, to knowingly squirrel money away for the future when it feels as if there are so many things to spend money on now. The key comes from following your financial plan and realizing that the payoff will far exceed the current wants.

A successful method for actualizing the money you should be saving is considering what percentage of your income you’ll be able to replace annually or monthly. A successful ratio would be in the 80-85% range. In other words, your savings should be able to cover 85% of your monthly salary. You gain a bit of ground because you can factor out your previous retirement contributions.

Overall, the key to future financial security is to invest, protect, and stick to the plan. Even if you waiver at times, make it a goal to make up any lost ground as soon as possible and continue reaching your regular goals. It can be a challenge, but also becomes a great reward. And, once you are following a successful plan, you won’t miss the nominal amounts you’re diverting. For more information on achieving financial freedom or if you missed Part One in our series, visit our website today.