3 Financial Tips for Your 40s | Capital Group

Creating a Financial Plan

MARCH 2019

Accounting for a complicated life

Welcome to your 40s, the decade of juggling. There’s a good chance you’re trying to finance a child’s education, while paying a mortgage and saving for retirement – all at the same time. You might also be joining the “sandwich generation,” with financial responsibilities for your growing children as well as your aging parents.

If you haven’t been focused on your finances before now, it’s time to get real. Here are three steps to check off:

1. Pay off high-interest debt.

If you owe money, you’re not alone. Many Americans in their 40s still carry student loan debt. On top of that, credit card debt peaks between the ages of 45 and 54, at an average of $9,000.1 The debt you carry is consuming money that could otherwise be growing in a retirement account or college fund.

  • Take a hard look at your spending to find costs that could be eliminated to free up some cash.
  • Make a list of your debts, and focus on paying off those with the highest interest rates first.
  • Use bonuses and raises to pay down debt and save for retirement.

Think about paying off debt as an investment. Rather than paying interest, you could be earning it!

2. Strategize for retirement.

How confident are you about your future? According to a 2018 Gallup poll, 46% of Americans believe they won’t have enough money to retire comfortably.2 If you’re one of them, it’s not too late to take action.

  • Use an online retirement calculator to calculate how much you’ll need and if you’re on track to get there. You can also see how adjusting your investment strategy can make a difference.
  • Be ready to make some tough choices. If you must decide between saving for retirement or for your child’s education, experts often recommend prioritizing retirement. While student loans may be available, you can’t borrow to fund your retirement.

As you get closer to retirement, you need to be prepared with a solid plan.

3. Invest like a grown-up.

If you’ve been putting away money on a regular basis, you should be proud of yourself. But you also need to be strategic about what you do with that money. At this point, you should have a comprehensive investment plan that considers your goals, when you expect to reach them and how much financial risk you’re willing to take.

  • Work with a financial advisor who can help you draft a plan and recommend appropriate investments.
  • Consider rebalancing your investments periodically to keep them aligned with the goals you’ve set. You may want to take on less risk as you get older, for instance, or your priorities may shift as life changes.
  • Develop a plan that encompasses all your different accounts – both tax-advantaged and taxable. If you’re married, be sure to factor in your spouse’s investments as well.

Investing is smart, but it’s only the first step. You’ll get the most from your hard-earned money when you understand how specific strategies can work for you as you pursue your goals.


1. ValuePenguin, Average Credit Card Debt in America: March 2019.

2. Gallup, Update: Americans’ Concerns About Retirement Persist. May 9, 2018.


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