Have you ever wondered if you’re on track to a comfortable retirement, or if you’ve done everything a forty-something should have done by now, financially speaking? Never fear, we’ve put together a straightforward finance guide that will answer all your questions.
What should you be doing with your super?
ASFA estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 (or $545,000 for a single person) assuming a partial Age Pension. ASFA also estimates that because a modest lifestyle is mostly met by the Age Pension the lump sum required to support it for a single or couple is $70,000.
“Your average earnings are approaching a peak, so making extra payments where you can is often a good way to boost your savings. This can be done via salary sacrifice or voluntary payments,” says Mark O’Leary, of KRA Wealth Management and AMP financial adviser. “For people in their forties it’s a great time to review what insurance and beneficiary policies are in place for your superannuation should the unthinkable happen.”
Want to know more about Superannuation and retirement? Read the guide HERE
Money matters you should take care of in your 40s
Create a will and estate plan, or review and update them. You should already have a will and estate plan by the time you’re 40, but if not then it’s time to start writing them up. Also think about who you’ll appoint as your power of attorney and health care proxy.
According to financial expert and author of the Breakfast Club for 40-something, Vanessa Stoykov, getting good insurance is key at this age. “Do you have anyone that depends on you to earn money? A spouse or a child? If you don’t insure yourself, you have no peace of mind that if the worst happens, everyone else will be ok. Also think about insuring your ability to earn money - income protection. If you do get sick, you want to focus on getting better, not on how to pay the bills.”
Want to know what you need to include in a will? Read about the two things most people forget to put in their wills HERE
How much money should you be saving in your 40s?
Vanguard investor group suggests saving 12% to 15% of your salary each year, which might be a more feasible goal. Finance expert Vanessa Stoykov says while it depends on your situation, in your forties you should be planning for your retirement.
“Work out how much you’ll need to retire and then how much you need to live your current lifestyle per month, and work out a budget that will help you reach your savings goals for each.”
Want to know how to make your savings work harder? Read the guide HERE
How much money should you be earning in your 40s?
According to data collected by the Australian Bureau of Statistics people aged between 35 and 44 earn $5912 a month before tax. The same data suggests people aged between 45 and 54 should be earning $5928 a month before tax. Your earnings begin to peak in your forties.
Want to know how your situation stacks up against the average Australian’s finances? Read the guide HERE
What money mistakes should you avoid in your 40s?
Some of the biggest mistakes people can make in their forties and beyond is not thinking about retirement, taking out large home loans later in life, and giving more money than they can afford to family and children, or racking up new debt. Your forties is a time to get all your debt paid off, your assets settled and get on track to achieving your retirement plan.
Want to know what mistakes Australians make when preparing for retirement? Read the guide HERE
What assets should you have in your 40s?
Your forties is a time to lockdown assets such as property or shares, says Vanessa.
Thinking about changing banks? Read our guide to changing banks HERE
What is the biggest drain on your finances in your 40s?
“Injuries or mortgages are the biggest drains on finances at this age group,” says Vanessa. “Which is why income protection and insurance is so important!”
Need some money-saving inspiration? Read our guide to being better with money HERE
What money habits should you develop in your 40s?
Vanessa recommends that those in their forties make a habit of regularly checking their superannuation balance and investing as much money into it now that they can afford to ensure a comfortable retirement.
Want to know how to improve your financial situation in 24 hours? Read the guide HERE
All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.