Statistically speaking, 40 is often the age when both your parents are approaching retirement and your children are just about to enter college. This is a wonderful time for both generations, but your financial situation can feel extremely stressed, especially if, like most Americans, you haven’t saved as much as you think you need. There are plenty of unknowns that you cannot plan for, but we’ve identified a few ways in which you can focus on manageable steps to secure your finances by age 40.
Get financially in sync with your partner. In a recent study, Fidelity discovered a major disconnect between where partners believe they are financially and where they actually are. For example, 72% of couples believe that they are on the same terms with their mate when it comes to money. When you dig a little deeper, however, data shows that most couples are not on the same page when it comes to retirement age and how much money they have saved. Shocking fact: 43% of couples don’t know what their partner earns.
We’re not suggesting you go full-on investigative reporter into your mate’s entire financial history. But the following three things are essential to know by the age of 40: how much you’re saving for retirement and how close each of you are to your goal, where all of your account information including logins and passwords are located, and a general idea of the lifestyle you want to share in the future.
Start the money conversation with your parents. While 75% of adult children over 30 agree and their parents agree that transparent conversations about healthcare and retirement expenses are necessary, a whopping 40% of those same people said they have not detailed out those issues. About half of caregivers spend more than $5000 on unforeseen health costs like prescriptions. Talk to your parents about how you want to handle this going forward, and if there is too much tension around the subject, consider working with a care manager or financial planner.
Ask yourself quality-of-life questions. Consider your future quality of life a different sort of investment in your future. You need to ask your partner and yourself about how you envision yourself living post-40 and beyond. Do you want to go for a second act career-wise? Do you want to run a farm in Costa Rica? Do you want to travel the world? Do you want to keep a house big enough to fit all of your grandchildren during the holidays? Think about possible scenarios for later in life, and figure out how to get there.
For more helpful financial tips to know before you’re 40, visit Time.
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Are you on track to be financially aware with yourself and your partner by 40? Share with us in the comments.