Peak earning years, Children growing up and parents aging, 40’s – 50’s
If responsibility is something you discover in your previous stage, you are head-on with it now. Your family’s growing and so are your expenses. You spend to provide a better lifestyle for your family, you have to start paying for your children’s university and you might also need to help out your aging parents financially now. At the same time, you may be adjusting to life after divorce or remarriage.
This is the stage when you’re likely to enter your peak earning years. Don’t take that as a green light to spend your money frivolously. Retirement is not far fetch for you now. But at least you still have time to review your plan and catch-up if necessary. The key is to find the right balance between your current lifestyle and future well-being.
Here’s what deserves your attention financially:
Find the right balance between your lifestyle, goals and future well-being: Have a proper financial plan
1. Know how much to spend for your children’s education.
- Your children is going into university. It is important that you don’t sacrifice your retirement saving for your children education. Work out how much you can afford to spend. This is important because your kids can always take up an education loan but there is no way you can get a retirement loan.
2. Check your retirement plan’s progress.
- Check if you’re on track to achieving your retirement savings goals. If you’re behind the plan, work on to get back on course, consider adjusting your investment portfolio and save more each month. Now is the time to crunch the numbers and find out where you stand. You should be in high gear for your retirement savings now.
- Make sure you are on / ahead of your retirement plan before committing into new lifestyle purchases like a better house or car.
3. Pay off debts.
- Expedite your debt repayment. Pay off all your debt, especially for your personal use assets. If you were to take up debt, make sure it is only for acquiring income-generating assets.
4. Find ways to enhance the return on your savings.
- You have accumulated some wealth. Find ways and utilize available opportunities to enhance the return of your wealth. Invest wisely, consider a diversified portfolio to help spread investment risk. Choose your investments based on your risk tolerance, time horizon and financial goals.
5. Review your investment performance.
- Review your existing investments to make sure they are performing and do proper re-structuring is needed. Reassess the risk level from time to time to match your profile.
6. Maximizing your tax savings.
- You’re likely paying the highest taxes in your life. Make sure you’re claiming everything you can. Save part of your retirement saving into Private Retirement Scheme to capitalize on the tax relief.
7. Keep your Emergency Funding current.
- Continue to maintain 3-6 months of total expenses in your emergency fund.
- This portion of money has to be kept in a safe and liquid tools. Apart of Fixed deposit, you can also consider Money Market fund because of its FD liked of return, but without the need to lock your money for the fixed period.
8. Reevaluate your insurance needs.
- Your children may have grown up and you would have accumulated more wealth. Reevaluate your protection needs and adjust your insurance strategies.
- Protect your earning power. While you probably assume you’ll be able to work and save until you’re ready to retire, unfortunately, there is no guarantee.
- Review your medical and critical illness coverage to match current needs now, while you’re healthy and the premiums are less expensive. It is important as medical bill and long term care could easily deplete your retirement savings.
- Long term sustainability of your medical insurance plan is important now.
- Talk to your financial adviser for personalized advice.
9. Make sure your Estate Plan is in place and up-to-date.
- Review your estate plan to make sure it is up to date with changes in your life. Confirm that the executors and guardians are still properly chosen.
Independent and unbiased advice will help you to optimize your finances. Wealthcare.my connect you to a professionally qualified and licensed financial adviser.