Blue Bell PWM


Financial Advice in your 40’s

Alex LaRosa, CFP®

Alex LaRosa, CFP®

Investment Advisor Representative

March 10, 2021

Financial Advice in your 40’s  

Your 40’s are an interesting stage in the financial planning life cycle. For many, it is the halfway point between entering the work force and reaching full retirement age. It is also the age where most people realize they are behind the 8-ball and begin to engage in financial planning for the first time. How you invest and save for retirement in your 40’s can strongly impact your future success.  

Ramp up Savings! 

You should have already been contributing to your retirement plan since you started working whether it is a 401(k), 403(b), IRA, etc. If you have not, then the best time to start is now. Make sure you are taking advantage of any employer matches that are provided through work.  

It is important to invest in vehicles outside of these qualified accounts as well. For instance, if you are reaching the maximum contribution limit on qualified plans but can still save more, you can invest in a taxable brokerage account. While these accounts are not tax deferred, they provide advantageous capital gains tax rate for anything held long-term (>12 months).  

If you are under the income thresholds ($140,000 for individuals and $208,000 for married couples, you should be contributing to a Roth IRA. If you are not aware of advantages of the Roth IRA, you can read about them here.  

The Back Door Is Always an Option 

If your income is above the threshold for Roth IRA contributions, there is always the option of the back door Roth IRA. These do not make sense for everyone so be sure to speak with your advisor and tax preparer before attempting. You can read more about these here

Education Planning  

A common topic for those in their 40’s is education planning. If you wish to help your kids pay for college, you should open 529 plans. These allow for tax free growth and withdrawals if used for higher education. They can also now be used to cover any education related expense grades k-12.  

When is comes to education planning the earlier you start the better! 

Evaluate Insurance  

We often see many individuals with insufficient coverage at this stage in their lives. However, we also see many that are “over” covered when it comes to insurance. We believe that insurance, when used properly, is an important part of your financial plan. Insurance should be used to offset risk and not as an investment vehicle (variable policies). Here are a few types of policies to consider during your 40’s: 

  • Term Life 
  • Disability 
  • Umbrella 
  • Proper home and auto  

Blue Bell PWM does not sell insurance. We can however help individuals evaluate their current policies and point them in the right direction if we believe changes are needed.  

Put Your Plan Together 

As we mentioned in the beginning of the article, people in their 40’s typically start engaging financial planners to help them get on track. A financial planner can help you create long-term financial goals and layout the path to achieve them. If you are in your 40’s and would like to start putting your plan together one of our CFP® professionals would be happy to help.  

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Financial Advice in your 40’s

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