Many wonder in their 40’s, “Am I doing the right things?”

Home, kids, student loans… What about the costs of college and lingering credit card debt? For some, you’re well underway with your budget and planning. For others, there’s a start, but the direction is a bit uncertain.

Here are a few suggestions to get you on track:

      1.  Finish paying off your Consumer Debt

Credit card debt can be costly. Make this a priority to pay off. Then go ahead and use and pay off your credit cards each month instead of leaving a balance forward. Interest charges on this type of debt can eat away at your wealth.

      2.  Avoid Lifestyle Inflation

Now that you’re making more, you’re spending more. You can finally afford that higher end car, that bigger home, a more extravagant vacation. However, avoid the trap of “lifestyle inflation.” Don’t spend all of your money increasing your lifestyle. You gain zero doing this. What you want in your 40’s is to reduce outflows and increase savings so that you have maximum choice in the future.

     3.  Time to Increase Retirement Contributions

When your cash-flow has increased in your 40’s due to increased wages and reduced debt, put that money to work.  Increase and maximize your retirement contributions. This will give you maximum choice later in life.

     4.  Tax Planning

Many people don’t think about tax planning until it’s too late. Tax planning is increasingly important as you age. Keep in mind that today–historically speaking–our tax rates are near historic lows. But, you may not necessarily be paying less in tax in retirement, so consider ways today to make changes and adjustments to your investment accounts to reduce taxes in the future. Examples include Roth 401k, Roth IRA, life insurance and something called a Backdoor Roth. Ask a professional about these important strategies to see what fits best for you.

     5.  Consider your long term healthcare now

The high costs of healthcare are a strong consideration now and especially in the future when earned income is lower or non-existent during retirement. In your 40’s, it’s time to consider a Long-term Care Insurance Policy as the costs of this type of coverage just keep going up as you age. Another strategy to assist you with long term healthcare costs is the HSA account (Health Savings Account). This way of saving for today’s as well as future healthcare costs may be triple tax-advantaged. Many call it a “shadow 401k” as funds may be invested and grow in a tax-advantaged manner. Don’t leave your long term healthcare to chance when you can make plans today that give you flexibility and choice tomorrow.

     6.  Take care of yourself now

A home, a growing family with growing needs and schedules, a career that may have more demands on you—there’s lots to focus your attention on other than yourself! However, you need to take care of your health today. If you don’t, you may negatively impact your enjoyment of life as well as your financial life in the future. Make changes now to your eating habits, exercise and sleep habits for better health. Consider getting an accountability partner, trainer, or lifestyle nutritionist to help you get on the right track now.

Important Note: The views expressed in this post are as of the date of the posting and are subject to change based on market and other conditions. This post contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and should not be taken to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Lenity Financial, Inc. unless a client service agreement is in place.