Reaching Your Financial Goals in your 40s, 50s and 60s

As we move through life, we take on more responsibility. Buying your home, growing your family, funding your kids’ education, starting a business… each new responsibility brings new financial challenges.

At the start of your career in your 20s you may have been more focused on paying down student debt at the same time as beginning to save for the future. Your earnings were lower, so effective budgeting became very important. As your career developed your main worry may have been whether or not you were saving enough for the retirement you want.

In your 30s, like many people your priorities may have become buying a home and starting a family, while also continuing to budget effectively for higher household expenses and save for retirement. Your earnings probably grew, but so did your outgoings.

As you enter your 40s and beyond, things can change significantly as your earnings rise and retirement gets closer.

Goal-setting from mid-career onwards

Before looking at some proven ways to give you the best chance of meeting your financial goals, let’s break down some of the most common financial considerations for people in their 40s, 50s and 60s. While your long-term financial goals, such as a secure retirement, may stay the same, you are likely to have different short- and mid-term goals at each life stage.

Mid-career: 40s

Many people at this age are entering their peak earning years. While retirement may still seem a fair bit away, you may be wondering if you are saving enough.

Here are some common goals at this life stage:

• Paying down debt, including a mortgage
• Saving and/or paying for children’s education
• Saving and investing more for retirement
• Protecting your family through insurance and making a will
• Saving for short-term goals, such as family vacations, second properties or home renovations
• Preparing to possibly pay for aging parents’ care
• Potentially making a mid-career change, such as starting a business
• Maintaining an emergency savings fund for any unforeseen events, such as illness

Pre-retirement: 50s

In your pre-retirement years, thoughts often turn more to preserving rather than building wealth. You might also be considering early retirement. Many of the other goals people in their 40s have can also apply to people in their 50s, just with the added consideration of retirement being that bit closer.

Here are some common pre-retirement goals:

• Paying down any remaining debt
• Catching up with retirement savings
• Developing a retirement plan, including having a clearer idea of what your ideal retirement looks like and how you will pay for it
• Possibly moving to part-time work or self-employment
• Covering any ongoing family expenses while still saving enough for retirement
• Potentially downsizing your home if your children have flown the nest
• Adjusting your investment strategy to focus more on protecting your wealth
• Estate planning

Early retirement: 60s

Retirement is up there with leaving home, getting married and starting a family as one of life’s major stages. It’s a huge change. You will suddenly have a lot more time, but also potentially less income.

Financial priorities and goals at this age include:

• Becoming, or staying, debt-free
• Budgeting for retirement, including potentially lowering your spending to adjust to a lower income
• Downsizing your home
• Paying for travel
• Adjusting your investment portfolio
• Putting money aside for possible medical expenses
• Estate planning and your financial legacy

Setting SMART goals

The first step in achieving your goals is setting realistic goals in the first place. Consider using of the SMART method of goal-setting at each stage of life. Using this method, your goals should be:

• Specific: Specific goals give you a clear target to aim for, e.g. “Pay off $5,000 loan” instead of “Pay down debt”
• Measurable: A more specific goal like the above also enables you to measure your progress to ensure you stay on track
• Achievable: Use your knowledge of your own strengths and weaknesses to set achievable goals
• Realistic: Be realistic about what you can achieve. It’s good to aim high, but you are more likely to achieve realistic goals.
• Timely: Every goal should have a deadline attached to it so you can create a realistic plan for achieving it and track progress as the deadline approaches

Regularly reviewing your goals

Regularly reviewing your goals is another essential part of reaching them. Your financial goals, or plan, isn’t a document intended to be left gathering dust in a drawer; it should be a “living document” designed to evolve as your life changes.

An annual review is a good start. It helps you see the big picture of your financial situation, make small adjustments if needed and stay on track. It’s also a good idea to do a major review at specific life stages, such as the ones above.

You can do this review yourself, or with a qualified advisor. When you work with our wealth team, they will provide a set of fresh eyes and an educated second opinion to help you clarify any tweaks to your plan, or identify alternative strategies that could help you achieve your goals on time.

To get started reviewing your goals, talk with one of our advisors and book an appointment with one of our advisors today.