Ask the Advisor: Money Moves to Make in Your 40s

By Sander Tom, CFP® 

Sander Tom is a Certified Financial Planner with SchoolsFirst FCU.

According to a recent survey conducted by the Employee Benefit Research Institute, American workers who invested in an employer-sponsored retirement plan or individual retirement account, or IRA, said they saved more and felt less stressed. Here are some smart moves to help you save more and protect your family and assets.

Take The Match, Max It Out

If your employer sponsors a 401(k), 403(b) or 457(b) retirement plan, it may match your contributions — typical matches are from 2% to 8%. Contribute at least the maximum of the match, or else you’re walking away from free money. These plans allow you to contribute up to $19,000 a year or $25,000 if you’re 50 or older. Contributions are made with pretax dollars, so they help reduce your tax bill until you start making withdrawals upon retirement.

Contribute to an IRA

If you don’t have an employer-sponsored retirement plan or are self-employed, an individual retirement account allows anyone with earned income to save for retirement. There are two types: a traditional and Roth IRA. A traditional IRA acts like a savings account with tax breaks because your contributions and earnings grow tax-deferred until you start withdrawals after age 59 ½. Roth contributions are made with after-tax income, and they allow your earnings to grow tax-free if not withdrawn before you turn 59 ½ and the Roth has been funded for at least five years. Total maximum contributions, even if you contribute to both types of IRAs, are $6,000 or $7,000 if you’re 50 or older.

Tackle Credit Card Debt

If you have credit card debt, interest rates can be high, so you should try to pay it off or find a card with a lower interest rate. Shop around for the best interest rates, and consider a balance transfer offer that provides 0% APR for a promotional time period. Make sure you can pay off your balance before the nonpromotional interest rate takes effect and jumps higher than your existing card rate. If you can’t, look for a credit card with an ongoing lower rate.

Refinance Your Mortgage

One of the best ways to free up money is to refinance your mortgage. If rates have dropped since you purchased your home, search for the most competitive mortgage loan rates and consider shortening the length of your loan. That will get you an even lower interest rate so you can pay off your mortgage by the time you retire.

Prepare a Will

A will is a legal document that spells out what to do with your assets if something happens to you. If you have minor children, it designates who will take guardianship, including specifics about their care. If you don’t create a will, state laws will dictate what happens to your property and your children, so it’s important to make this a priority. You can create your own will if your estate is simple, and there are plenty of online resources and software programs to help you do just that. If you’re uncomfortable tackling this on your own, or if your personal situation is more complex, you’ll need an estate lawyer to help ensure your wishes are honored.

 Purchase Term Life Insurance

If you have a family who depends on you, a life insurance policy can protect them and your retirement assets if something happens to you. Its purpose is to replace future income you would have provided, so consider purchasing a cost-effective 30-year term policy, which can help your family pay off the mortgage, cover college expenses, or ensure long-term financial security. If you need help determining your needs, a licensed financial advisor with SchoolsFirst FCU specializing in life insurance can help. You’ll get advice about how to find the policy, premium and cash benefit that fits your needs and budget.


Have Questions? Let Us Help

Our financial advisors provide complimentary consultations to SchoolsFirst FCU Members, and can help find creative financial strategies tailored to your specific needs. Visit to learn more.




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This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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