Here are three additional ways people in their forties can maximize their retirement savings.
Don’t skimp on your retirement savings to pay for your children’s college education.
Why? Simple. You or your children can borrow money to pay for college, but you cannot borrow money to pay for retirement. In addition, when investing for retirement, time is indeed money. The more you can invest early on, the greater the likelihood that you’ll have more money when you retire. Also, working longer, say well into your sixties, may not be an option. Corporate downsizing and/or health problems could limit how long you can work. The fact is, saving more than you need for retirement will allow you to help pay off your children’s student loans when you do retire.
Make the most of what your employer is offering.
Your employer may well be offering more than a paycheck. For example, some companies match employee contributions to health savings accounts. Others offer retiree health benefits, pensions and more. Taking advantage of employee benefits like these can help you build additional wealth and provide for a greater sense of security in retirement.
Pay off your debt logically.
Sure, it would be great to retire without a mortgage. You would eliminate one of your greatest expenses, which in turn could allow you to withdraw less money from your retirement savings during market downturns to pay for unforeseen expenses. However, in your forties there may well be better ways to use your money, particularly if you have a low interest mortgage. For example, it’s better to pay off debts with higher interest rates, such as credit cards or vehicles. Then, if you have money left over, you could make extra mortgage payments. Consider this: on a 30-year mortgage, if you make one extra monthly payment a year, you will knock four years off the term of your loan.
To learn more about planning strategies for people in their forties, you can read the entire Kiplinger article here.