Retirement Planning - Checklist for Your 40s – Wells Fargo Retirement Planning

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Retirement Checklist for Your 40s

In your peak earning years, it’s important to stay on track with your retirement savings. That’s because there are likely to be fewer pensions and other sources of reliable income; therefore, much of your retirement income will come from your personal savings. Now is the time to continue to stay focused on maximizing your retirement savings and not let competing priorities get in the way.

1. Make saving for retirement a priority

  • Stay on target

    • Resist the urge to cut back on retirement saving to meet other expenses or accommodate other goals.
    • Annually review and adjust your saving and investing strategy to stay aligned with your long-term goals, even during periods of market uncertainty.
    • Put part or all of any bonuses, tax refunds, or other lump-sum payments into your retirement savings. Consider using direct deposit to put all or part of your tax refund directly into an IRA. You can ask the IRS to do this as part of your tax return.
  • Make your qualified employer sponsored retirement plan (QRP) work for you

    • Consider contributing up to the maximum allowable amount in your QRP, such as a 401(k), 403(b), or governmental 457(b) plan. This can help fund your retirement as well as reduce your taxable income.
    • If you are unable to contribute the maximum amount and your employer offers a matching contribution program, try to contribute at least as much as the match — otherwise, you are leaving free money on the table.
    • Avoid taking loans from your 401(k).
  • Consider investing on your own as well as at work

    • Think about investing money from each paycheck in a brokerage or savings account.
    • Fund an IRA. You can contribute to an IRA whether you contribute to a QRP or not and it can help supplement your QRP savings. Learn more about IRAs.
    • If your employer doesn’t offer a QRP or you’re self-employed, consider opening an IRA.
    • Determine the potential impact of maximizing your IRA contributions.
  • When changing jobs, evaluate options for your retirement plan savings

    • Your retirement savings may provide a substantial part of your income in retirement. Whether you’re starting a new job or have been displaced, you should learn the options for these assets.
      1. Roll assets to an IRA
      2. Leave assets in your former employer's QRP, if QRP allows
      3. Move assets to your new/existing employer's QRP, if QRP allows
      4. Cash out or take a lump sum distribution

Each of these options has advantages and disadvantages, and the one that is best depends on your individual circumstances. You should consider each option’s features, such as investment choices, fees and expenses, and services offered. When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with qualified employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.

2. Create a will, update beneficiaries

  • An up-to-date Last Will and Testament is important, regardless of your financial situation.
  • Create a living will can help ensure your wishes are carried out.
  • Beneficiary designations on any IRAs, QRPs, annuities, and life insurance policies supersede any instructions in your will or trust, so be sure they are up to date.

3. Protect your retirement savings from short-term needs

  • Think about preparing yourself for the unexpected

    • Consider setting aside three to six months’ expenses in a money market or similar account that can be accessed easily.
    • Don’t worry about funding it all at once; set a goal for yourself and work toward it over time with My Savings
      Plan®.
    • Couples should consider maintaining separate accounts such as checking, brokerage, or savings in their own
      names.
    • Think about protecting any family members you support financially by maintaining your appropriate level of life
      insurance.
    • Ensure that your homeowner’s insurance coverage keeps pace with your real assets.
    • Even if your company offers disability insurance, consider purchasing your own policy, too, to be sure you have sufficient coverage.
  • Manage your debt

    • Effective use of debit and credit cards can help you monitor your expenses and might also offer the advantages of reward programs.
    • Before you borrow, carefully analyze the impact any major purchases may have on your cash flow.
    • Try Wells Fargo's Debt Consolidation Calculator.
    • As you pay off debt, direct the money you save into emergency or retirement savings.

We are here to help you take the steps that are right for you. To get started, contact a Wells Fargo Retirement Professional today, and watch our video: "Jumpstarting My Financial Savings."

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