Of course, this does not exactly give you license to just sit back and take it easy. You’re about halfway through your working life, which means that you have half the time left to pull in the money that will sustain you for the rest of your life.
And, not to be pessimistic (although pessimism can be good for your finances), but that’s only true if you work until your intended retirement age. Unfortunately, a lot of people face early retirement—or can’t get hired at all in their later years, as one manager revealed to us.
But we’re here to talk about solutions, so we’ve rounded up the seven most common financial challenges facing people in the 40+ set. Our goal: ensure that your 80-year-old self can sit in a rocker and watch the clouds drift by.
1. If You’ve Been Avoiding Your Finances Entirely …
Think your financial situation is bad? Well, whatever you fear now is better than the situation you’ll face if you put this off for another year. So here’s how you can take action today:
- Review how much you have saved for retirement.
- Check your savings to determine just how many months you could fund basic expenses if you lost your job (we recommend at least six).
- Figure out if you’re in debt, and if so, how much you’ve accrued.
- Get your credit score via the steps in this checklist.
2. If You’re Living Beyond Your Means …
Keeping up with the Joneses is a human tendency—not a personal failing. We’ve got an entire article on how to cure comparisonitis, but, in short:
- Forgive yourself.
- Pinpoint what you envy. It may not be your friend’s six-figure salary, but it could be her intrepid travels.
- Be grateful for what you already have.
If you’re in debt, use this checklist to get out—and make sure that you know the top debt mistakes. For some added inspiration, check out how these people got out of debt, whether it was $20,000 or $60,000.
Then look into making more money. You can start by reading our Negotiating 101 guide, as well as get tips from real people who’ve gotten raises.
Finally, cut your costs. If your mortgage is too high, refinance. If your utilities bill is too steep, rethink your energy efficiency.
3. If You Aren’t on Track to Save Enough for Retirement …
The amount you need to squirrel away for retirement is the largest stash of money that you’ll ever need to save. To find out if you’re on track, do you know how much …
- you need to save in order to support yourself for 25 years or more?
- you need to put away every month in order to reach this goal?
- you’ll need to live on every month in retirement, taking inflation into account?
If you have a full-time job, start contributing at least 5%—or more, if you can swing it—into your 401(k) or other employer-based account. And those with and without full-time jobs should also boost their IRA contributions—up to the limit. If you’re unsure of the kind of accounts you need, use these 401(k) vs. IRA flow charts to find out, based on your tax filing status: