Retirement Planning Checklist for Your 40s

October 19, 2022

Retirement Planning Checklist for Your 40s

retirement planning checklist for your 40s

It's never too early to start thinking about retirement planning, and your 40s are the perfect time to get your ducks in a row. While you may not be able to save as much as you'd like, there are still things you can do to set yourself up for success. Here's a retirement checklist for your 40s to help you out!

How Do I Plan for Retirement at 40? 

1. Review your current savings

One of the best ways for Filipinos in their 40s to plan for retirement is to take a close look at your current savings. This will give you a good idea of how much you need to save on a monthly or yearly basis to have enough money to cover your expenses during retirement. 

Additionally, looking at your current savings will also help you determine whether you need to make any changes to your investment strategy. For example, you may need to start investing in more aggressive growth products to ensure that your savings will keep pace with inflation.

2. Figure out how much you need to save

A good rule of thumb is to aim for saving 10-15% of your income each year. But this will vary depending on factors like when you plan to retire and how much money you'll need to cover expenses in retirement. Use a retirement calculator to get a personalized savings goal.

But just how much should a 40-year-old have in retirement?

Well, there is no one-size-fits-all answer. The amount you will need to have saved will depend on many factors, including your expected lifestyle in retirement and the age at which you plan to retire. However, some general guidelines can help you get started.

For example, most financial experts recommend that you have at least enough savings to cover your basic living expenses for three to six months. This will give you a buffer in case of unexpected expenses or income disruptions. If you plan to retire before age 65, you may also need to factor in the cost of health insurance.

Another important consideration is inflation. Over time, the cost of goods and services tends to go up, so you will need more money in retirement than you do today. A good rule of thumb is to expect inflation to eat up about 3% of your purchasing power each year.

3. Automate your savings

Once you've determined how much you need to save each year, set up automatic transfers from your paycheck or bank account into your retirement account. This way, you'll never miss an opportunity to add to your nest egg.

4. Invest wisely

When the time comes start investing for your retirement savings, there are a few things to keep in mind. First, make sure you diversify your investments across different asset classes like stocks, bonds, and cash equivalents like money market funds. Second, don't forget about inflation—over time, it will erode the value of your money unless your investments are earning more than the inflation rate. And finally, don't put all your eggs in one basket—if one investment tanks, you don't want all of your nest egg going down with it!

Saving for retirement in your 40s may seem like a huge challenge, but it's important to start early and take advantage of compounding interest. By following this checklist and taking small steps each year, you'll be well on your way to a comfortable retirement. 

Talk to an InLife Financial Advisor to get started.

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