Each stage of your life has brought with it unique savings goals. Your first financial challenges were likely getting through college on a budget or moving out on your own and managing a budget for the first time. Then perhaps it came time to settle down with a significant other and buy your first property. For two decades or more, you have had clear goals to save toward, many of which have fallen in stride with significant milestones.
Now that you are in your 40s, your goals may have shifted to things like saving for kids’ college tuitions, making car payments for your soon-to-be-drivers, and chipping away at your mortgage. All too often, this changing list of savings goals omits one critical piece: saving for retirement in your 40s.
But even if you have been dragging your feet when it comes to revving up your retirement savings plan, you still have time to create and follow a plan that will help you build the retirement of your dreams.
You may be coming to what looks like a proverbial fork in the road, beckoning you to either secure your own future or pave the way for your kids or family members. It’s not hard to see why so many people in their 40s opt for the latter. But what may seem like an all-or-nothing choice is really a lesson in balancing your savings goals.
The first step toward saving for retirement in your 40s is to bring your retirement savings plan to the forefront. This doesn’t mean abandoning your other savings goals, but it’s important to focus on what you will need to save in order to secure your financial future in retirement. Start to paint a picture of what you want your retirement to look like, from your living situation and travel plans to healthcare expenses and related costs. Working with a Wealth Management team to map out these future costs can be very helpful.
If you’re still struggling with the idea of prioritizing your retirement savings needs, consider the fact that your financial stability will do more than help your retirement dreams come true; getting your retirement plans in order will also alleviate pressure on your loved ones.
An Individual Retirement Account, or IRA, is a great savings vehicle for any stage of your financial journey. Whether you choose a Traditional IRA or a Roth IRA will depend on your household income, access to an employer-sponsored retirement program, and your tax bracket. You can learn more about the differences between Traditional and Roth IRAs in this blog post.
In addition to maximizing your 401k contribution, opening an IRA in your 40s can be a great way to capitalize on what may be the most financially and professionally successful decade of your career. And while some experts recommend a Roth IRA primarily for young savers, this retirement savings option can be a useful tool for saving for retirement in your 40s, too.
You may not be quite ready to start thinking about your specific healthcare needs in retirement, but there’s no question that you will have expenses to cover as you maintain your general health and wellness. If you are currently enrolled in a high deductible health insurance plan, or if you are covered by one through your spouse or family member, you may be eligible to open and contribute to a health savings account, or HSA.
Your HSA is a powerful tool for retirement savings. By building HSA contributions into your retirement savings plan, you are actively planning for your healthcare future. You are also decreasing the amount of money you will need to take out of your IRA, 401k and other retirement savings accounts in order to cover health-related expenses.
Saving for retirement in your 40s can be challenging, especially when the kids and family members in your life start hitting important (and expensive) milestones. But preparing for your future and helping your loved ones does not have to be mutually exclusive. Now is a great time to work with a financial expert who can help you set and work toward your retirement savings goals. Our Wealth Management team at Union Savings Bank can help walk you through the process of building a plan and working toward your goals. Start a conversation with our team today and put yourself on the path toward the retirement of your dreams.