Amplify Financial : Your 40's

Your 40's

State your Future

In your forties, you’re facing new challenges planning for future events and managing your cash for immediate needs. Our financial planner, Dan Dillard, can help you find the right balance between saving for your needs on the horizon and enjoying the present.

Saving for College

No matter the age of your child, it’s not too early or late to plan for college expenses. Education savings plans like Section 529s and CESAs allow you to start planning for your child’s future early on, while savings bonds and custodial accounts provide additional options for financing your child’s education.

Planning for Retirement

Retirement planning involves an analysis of the various choices you can make today to help provide for your financial future. To make appropriate choices, you need to predict—as well as you can—your future economic circumstances. You’ll also need to establish your post-retirement goals. When you’ve determined how much of an income stream you’ll probably require in the future, you’ll be in a position to make wise choices now about income, saving, investments, and employer-sponsored or other retirement plans.

By the time you retire, you’ll need a nest egg that will provide you with enough income to fill the gap left by your other income sources. But exactly how much is enough? The following questions may help you find the answer:

• At what age do you plan to retire? The younger you retire, the longer your retirement will be, and the more money you’ll need to carry you through it.
• What kind of lifestyle do you hope to maintain during your retirement years?
• What is your life expectancy? The longer you live, the more years of retirement you’ll have to fund.
• What rate of growth can you expect from your savings now and during retirement? Be conservative when projecting rates of return.
• Do you expect to dip into your principal? If so, you may deplete your savings faster than if you just live off investment earnings. Build in a cushion to guard against these risks.

When you know roughly how much money you’ll need, your next goal is to save that amount. It’s never too early to get started; first, you’ll have to map out a savings plan that works for you. The next step is to get help putting your savings plan into action.

Investment Planning

If you’re fortunate enough to have money left over after paying the costs of living, you may be able to make that extra money go to work for you by investing it to earn a financial return. Investment planning involves deciding how best to put your money—your capital—to work to achieve your financial goals.

Protection Planning

We all face risk—the possibility of injury, illness, death, or property destruction—each day. Although you can never eliminate risk, you can guard against financial loss by shifting part of your financial risk to a larger entity (your insurance company) that’s in the business of dealing with that risk. In return for your payment of premiums, your insurance company agrees to pay you (and/or others) a certain amount of money for a specified loss. This loss may or may not occur, so both sides gamble. Still, the potential benefits of insurance may be well worth the cost.

Changing Jobs

Downsizing is one reason you may be seeking a new career. Reaching a professional plateau is another. The fact is that many people change careers, sometimes more than once. Losing your job is an emotional experience—whether you are laid off or fired, whether you quit or retire. Your feelings of self-worth are tied more closely to your job than you realize. Although you’re certainly entitled to relax awhile after your job ends, don’t let your need to relax become an excuse to avoid facing your future. The more time that passes, the more likely you’ll feel anxious and depressed about your future. Here are three tips on what you can do to keep yourself moving:

• Pretend that you’re still working. You’ve probably heard the adage that finding a job is a full-time job. Well, it’s usually true. So why not pretend that you’re still working? You don’t have to get dressed up for this job, but at least get out of bed at the same time, make yourself a cup of coffee, and get going. Stop for lunch and then work again until late afternoon. Keep moving, and you’ll accomplish your goal of finding a new job with a lot less anxiety.
• Set daily and weekly goals. Get a calendar and write down what you want to accomplish each day for one week. Be specific and reasonable. Don’t write “call future employers” Instead, write “call the human resource departments at five publishing companies.” Then, write down what your weekly goal will be. You might write: “compile a list of five potential employers and send resumes to them.” Setting goals will help you feel in control of your fate and will ultimately help you get a job.
• Reward yourself. Looking for a job is tough, so after a long, hard day of job-hunting, reward yourself. For instance, promise yourself in the morning that if you accomplish everything on your list by three o’clock, you can go to the matinee of the movie you’ve wanted to see

When you lose your job, you probably won’t be able to live the same way you lived when you had a job. If you try to live the same way, there’s a good chance you won’t survive financially. Keep in mind that even though you’re on a financial diet, no diet lasts forever. At some point, you’ll find another job and the crisis will pass. Therefore, you want to be especially careful that the decisions you make now aren’t shortsighted. Do what you can to survive, but only do what you really have to.

Whether you need to manage transitions, learn about your savings and cash management or identify and plan your retirement and investment options Dan wants to help. He offers a complementary 30-minute consultation to help you identify the financial strategy that’s best for you. Please contact Linda Koop at 512-519-5476 or use our contact form to set up an appointment.