Retirement Planning in Your 40s

Is retirement starting to weigh on your mind? It's a common concern for people who are in their forties. The good news is, thinking about it now gives you lots of time to build a good, solid nest egg. Here are four ways to do that:

Save, save, save

No surprise here: Getting ready for retirement involves setting money aside.

People often put off saving because they don't feel they have enough money to make it worthwhile. Instead of delaying, do yourself a favor and set aside however much you can spare. Even if you start with just $10 a week, you'll be better off than if you hadn't started at all. (The next step is to put that money into an investment account where it can potentially earn more money.)

Focus on your habits.

Build on the good habits you started in your thirties. Break the bad habits by replacing them with behaviors that help you save. Chances are, your forties are high-earning years for you. Be careful that the money flowing in doesn't flow right back out again.

Envision your retirement.

This isn't just a feel-good exercise—though chances are it'll accomplish that too. It's important to think about what your retirement will be like. These days, there are a lot of ways to personalize retirement to match your goals, lifestyle, and budget. Will you stay in your house or relocate to an area with lower cost of living? Will you enjoy the leisure time or want a part-time job to give your life some structure? At what age would you like to retire?

Envisioning your retirement can also make it easier to keep up your savings and make small sacrifices now. It always helps to remember what you're working toward.

Balance your financial goals carefully.

Kids headed for college? Mortgage payments weighing on you? Unexpected medical costs throwing a wrench in your plans? At some point, other financial needs are bound to infringe on your retirement planning. Put together a Plan B, and you could find it easier to stay on track. You can start by learning how to save for retirement and college at the same time, and what to do if you have debt.

¹ http://www.bizjournals.com/austin/stories/2005/08/15/focus2.html
http://www.money-zine.com/Financial-Planning/Retirement/Retirement-Planning-in-Your-40s/
http://www.bankrate.com/brm/news/Financial_Literacy/April07_retirement_40s_a1.asp?caret=23d

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