Recently, we wrote an article on why it’s important to start saving in your 20s (which you can find here). However, what if you’re in your 40s, not your 20s? Does that mean you can’t start saving now? Absolutely not!
In this article, we’re going to talk about why you should be saving money in your 40s, and the 6 best ways to do so.
Quick Article Guide:
- Get Rid of Debt
- Open a Roth IRA
- Master a Skill
- Get in Shape
- Balance College and Retirement Savings
- Don’t Give Up on Stocks
- Why You Should Save
By the time you’ve reached your 40s, there’s a good chance that you’ve had to make a big purchase or two and endured some debt. But hopefully now that you’re in your 40s, you’ve also obtained a well-paying job, or have a steady flow of income coming in.
As tempting as it may be to spend your earned money on fun (but unnecessary) purchases, you’ll benefit much more in the long run by using that money to pay off your debt.
Here’s a calculator that can help you figure out how to pay your debt off effectively.
While a 401(k) or a traditional IRA may offer tax savings, opening up a Roth IRA or Roth 401(k) and saving for 15-20 years can ultimately beat the amount of deductions you’d receive with a traditional IRA or 401(k). In addition, all of your earnings on a Roth IRA are tax-free, even when you withdraw them after you retire!
It is important to note that there are income limits when determining your eligibility for opening a Roth IRA, which you can find here.
Think you can’t learn a new skill past your 20s? That’s absolutely not true. If you’ve got some extra time on your hands and have been thinking about learning an in-demand skill for a little while – such as social media marketing, analytics, graphic design, etc. – what are you waiting for?!
Mastering one of these skills (getting a certification is even better if you have the means) and charging others for your services is an easy way to get and save some extra money in your free time. Plus, how much more accomplished would you feel spending your free time earning money from a skill versus just coming home and idly watching tv?
Luckily, we live in an age where obtaining information is easier than ever. You can look up some tutorials online, take a community college class, or check out the website Constant Contact, which offers seminars on certain subjects (some of which are free).
This may not be exactly what you were expecting to see on this article, but this could be a great way to save some money. By exercising and eating healthy consistently, not only will your body thank you in the long run, but you could save money on health and life insurance each year. Companies will always charge less to someone who is healthy and has a lower health risk versus someone who is overweight and has a few health issues.
No need to do anything crazy, working out 3-4X a week with at least 150 minutes of exercise already puts you on the path to better health. If you can, grab a buddy to join! It’ll make the time go by faster, and you’ll both benefit.
If you have kids, you likely want to save as much money as possible for them to attend college with little to no student loans. However, you can always borrow money for schooling – you can’t necessarily do the same for retirement.
It’s kind of like the analogy they use on planes in case of a crash; put your own mask on before helping others. We’re not saying that you shouldn’t help your kids pay for college if you can, but don’t put your entire savings into it. See if they can qualify for any scholarships, or take out a small student loan. You can also look into purchasing a term life insurance policy to cover their college costs.
They have much more time to save and pay off debt than you do. And if you save enough for retirement, you may have money later on to help them pay back that loan.
While you definitely don’t want to be taking a lot of financial risks at this point in your life, it may still be wise to invest in the stock market if you haven’t already. Vanguard’s target-date retirement funds suggest people in their 40s who want to retire in about 25 years should have 90% of their money in stock funds, and about 10% in bonds.
These are only guidelines, but it is important not to write off stocks just because you’re trying to be a little more safe with money. Investing in the right (and stable) stocks could end up helping you in the long run and significantly increase your investment growth.
This is probably a no-brainer for most, but it really is crucial that you should start saving in your 40s if you haven’t already. Even if you have a job that you enjoy, there comes a point in your life where you’re probably going to want to sign-off and spend your days doing whatever you’d like, rather than having to spend it working.
The longer you put off saving, the longer you’ll have until retirement. If you invest in yourself now, your future self will thank you – possibly from an island sipping on a margarita!
About JRC Insurance Group
JRC Insurance Group is an independent life insurance agency, and a top seller of term life insurance. Our staff possesses a collective experience of over 49 years in the life insurance industry. We work with over 45 top-rated life insurance companies, which offer a wide variety of plans for a wide variety of purposes, both individual and commercial.
To obtain a free quote, or to learn more about your options for affordable life insurance, please give us a call today toll-free at 855-247-9555 or request a free instant quote online below.