Print this page

Considerations in Your 40s

Invest in your future

Carefully manage your priorities

Where do you see yourself in retirement?
It’s easier to plan when you have a vision for where you’re headed. A successful plan reflects your current situation, and is flexible enough to accommodate your changing needs.
Why plan for retirement?
People are living longer. That means you could be retired for nearly as long as you worked. How will you generate income for that period of time and how much will you need?

A good rule of thumb is that you will need 80% of your pre-retirement income in order to maintain your pre-retirement standard of living in retirement — more if you plan to travel extensively or hope to leave substantial assets to your heirs.

And, you should plan on a retirement of 30 years or more.
Your retirement savings plan
With a number of years to go until retirement, your focus should still be on accumulating adequate savings. Set a savings goal, and get into the habit of saving enough on a regular basis in order to reach that goal.
  • First, establish how much you will need in retirement. If you’re many years from retirement, it can be difficult to estimate an amount, so consider starting with the 80% replacement figure mentioned earlier. As you get closer to retirement, you may want to anticipate actual expenses more accurately so you can refine your savings goal.
  • Once you know how much you’ll need, you can determine how much to save each month to arrive at your goal.
  • A good estimation involves a number of factors: your current age, your desired retirement age, the expected rate of return on your investments, how much you’ve already saved, etc. Fortunately, sophisticated retirement calculators make it easy to figure out.
Start by finding out if you’re on track with our Retirement Quick View Calculator. Modify your answers and try some “what-if” scenarios. A little more in savings today can have a big impact 20 years from now.
Your “sandwich” plan
Many adults are not only raising their children and putting them through college, but also are looking after, or will soon need to look after, their aging parents. In many families, that can add up to an unsustainable burden. With good investment planning and a realistic perspective, many of those in today’s “sandwich generation” can overcome the challenges and help keep their parents, children — and themselves — going strong. Here are some steps that could help you head off trouble and keep you on track with your retirement goals.
  • Teach your kids well. Young adults starting out today face financial and economic obstacles their parents never encountered. You can’t fix the economy, but it’s never too late to teach them about saving, making smart purchases, and the importance of managing their money.
  • Keep saving. When it comes to planning, nothing beats the power of investment compounding. The sooner you start a college fund for your children while continuing to build your retirement savings, the more options and opportunities you create for you and your family down the road. And while there are scholarships and financial aid for college, there is no such thing for your retirement.
  • Talk to your parents. Yes, most parents are “old school.” They don’t want to discuss finances with their kids. But if they won’t talk to you, maybe they’d sit down with your financial advisor to discuss their current situation and their plans for the years ahead. It could give all of you peace of mind.
  • Consider long-term-care insurance. Look into the benefits that long-term care insurance could provide your parents relative to the costs.
Retirement planning is an ongoing process. It takes time, patience, and strategy.
For a list of tips and ideas to help you save and plan for retirement, visit our retirement checklist for your 40s.
Recordkeeping, trustee and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank, N.A. This information is for educational purposes only and does not constitute investment, financial, tax or legal advice. Please contact your investment, financial, tax or legal advisor regarding your specific needs and situation.