Education

RETIREMENT: WHAT TO DO IN YOUR 40s

In your 40s, you can look at your retirement savings and realize that you either have a healthy start on the future … or that it’s time for some emergency action.

If you started contributing to your retirement fund in your 20s or 30s, your money has already been growing. And if you can swing it, your 40s are a good time to take a look at increasing your monthly contribution.

But if you’ve waited until now to get started, it’s time to get serious.

What can you do?
- If your employer offers a retirement plan, such as a 401(k), you should take advantage of that right away and contribute as much as possible. The current limit is $18,000 per year.

And many employers offer some form of matching funds, so that means free money for your future. Take advantage of this.

- If your budget has room, you should also consider putting money into an IRA each year, which is one more way to build your retirement fund.

- Be sure to study your retirement plan investment options and decide on the potential rewards vs. risks levels you are comfortable with. A financial advisor can help you find the saving and investment mixes that feel right for you.

Other things to consider
- Don’t forget about your emergency savings. Experts recommend that you maintain savings account in a bank or credit union so you can have quick access to money for things like unexpected medical bills or car repairs. You should have enough on hand to cover at least three months of normal expenses - more if possible.

- Pay down debt. That’s because the more debt you have, the more you’ll be paying in interest costs – and that’s money that could be going to savings. If possible, pay your credit card bills in full at the end of each month. And setting a goal of having your house paid off before you retire will be a huge help in reducing expenses.

- If you have kids, you’ll need to make some hard decisions about their college funds. While it’s great if you can save for their schooling, some experts say saving for your retirement is more important at this point.

It might all sound like a lot of work, but taking positive steps to save now will make it all worthwhile later.