Your 40s Financial Planning Checklist

Action Steps:

• 401(k): $23,000 base + $7,500 catch-up = $30,500 total (age 50+)
• IRA: $7,000 base + $1,000 catch-up = $8,000 total (age 50+)
• HSA: Max out $4,150 (individual) or $8,300 (family) if eligible
• Goal: Save 20-25% of gross income for retirement

Action Steps:

• Calculate retirement needs: 80% of current income (typically $50K-$150K/year)
• Target net worth: 4-6x annual salary by age 50
• Use 4% withdrawal rule: Need $1.25M for $50K/year income
• Account for Social Security (estimate $2,500-$3,500/month at 67)

Action Steps:

• Target 70-80% stocks, 20-30% bonds in early 40s
• Diversify across US stocks, international, and real estate (REITs)
• Reduce expense ratios (target under 0.20% for index funds)
• Rebalance annually or when allocations drift 5%+

Action Steps:

• Max traditional 401(k) to reduce current taxable income
• Consider Roth conversions in lower-income years (strategic moves)
• Tax-loss harvest in taxable accounts to offset capital gains
• Work with CPA/CFP on business deductions if self-employed

Action Steps:

• Project 529 balance growth (calculator tools available)
• Decide funding level: full, partial, or let kids take loans
• Research scholarships, grants, and work-study programs
• Don't sacrifice retirement—kids can borrow for college, you can't for retirement

Action Steps:

• Review and update will, trusts, and beneficiary designations
• Consider irrevocable life insurance trust (ILIT) for large estates
• Name successor trustees and healthcare proxies
• Explore gifting strategies ($18K/year per person tax-free)

Action Steps:

• If rate is under 4%, prioritize retirement savings over payoff
• If rate is over 5%, consider accelerated payoff strategy
• Goal: Enter retirement debt-free or with minimal low-interest debt
• Consider downsizing in retirement to free up home equity

Action Steps:

• Max HSA: $4,150 (individual) or $8,300 (family) + $1,000 catchup at 55
• Pay current medical expenses out-of-pocket, let HSA grow
• Invest HSA in stock funds for long-term growth (not just cash)
• HSA is a "stealth IRA"—withdrawals tax-free for medical at any age