You’ve probably seen the guidelines on where you “should” be financially based on your age. While these articles can be helpful, they can also be terrifying, especially for those who feel like they’ve fallen behind. You may be wondering how to get ahead financially or curious if it's even possible.
If you are ready to learn how to get ahead financially in your 40s, 50s, 60s, and beyond, read on for our best tips on how to do just that, no matter what your current financial situation looks like.
But before we dive into our tips, let's discuss how to answer your burning question "How am I doing financially?"
How am I doing financially? A check
Have you asked yourself this question lately? If not, there’s no better time than now to ask and answer it, by doing a financial health check. Just like it’s essential to keep up with your physical health checks, you should do the same with your financial health.
One of the key steps in a financial health check is understanding where you currently stand. To do this, take stock of your debt, expenses, and income. This will help you figure out where to focus your attention and priorities.
Once you do this, no matter what your finances look like, you can move forward and take action with the tips below.
One thing to note before we dive into specific ways to get ahead financially; It’s important to forget about what you think you’re “supposed” to have saved, accomplished, or owned by a certain age. And forget about what you “should” have done with your money when you were younger.
It’s easy to look back and think about all of the things you could have or should have done in your 20s and 30s to help you get ahead financially. But there’s no use in that because we can’t change the past.
Luckily, no matter your financial situation or age, it’s never too late to get on the right track and change your finances and your future.
How to get ahead financially in your 40s
1. Build up an emergency fund
There’s no better time than your 40s to build up your emergency fund. While emergencies can happen at any age, if you don’t have one in place yet, your 40s are an ideal time to prioritize an emergency savings fund.
In your 40s, you’re likely to be responsible for children, aging parents, or other family members (not to mention yourself), so it’s vital that you have the means to deal with anything that pops up.
How much you save is up to you, but a good rule of thumb is to have at least three to six months of your basic living expenses saved in an account that is easily accessible and liquid.
2. Develop a plan for aging parents
While not everyone will take care of their parents, in-laws, or other older relatives (financially or otherwise), you should be prepared if this is a possibility. Many adult children become caregivers for their aging parents or make consequential financial decisions on their behalf, and it is important to understand what this will entail ahead of time.
Consider who in your family might need your support in the future, whether you are willing to provide this support, and how much it might cost you financially. If you’ve never had a money conversation with your parents before, now is the time to do it.
So be sure to make a financial plan that includes helping out your folks.
3. Plan for college savings, but not at the expense of your retirement
If you haven’t started to save for your children’s education yet, your 40s are an excellent time to buckle down and do just that. Consider contributing monthly to a 529b plan or a custodial account.
If you contribute consistently, you’ll have given your children a head-start on paying for their education by the time they reach college age. One caveat: yes, you would do anything for your children, but don’t sacrifice your retirement for them.
This is not the time to put yourself last. Remember that your children can find other ways to pay for college that don’t involve you sacrificing your future. You only have so many years you can save for retirement and watch your investments grow.
4. Start investing if you haven't already
Investing your money is how to get ahead financially in your 40s. So if you aren't currently investing your money now is the time to get started! Creating a diversified investment portfolio will help you get ahead and prepare for the future.
The great news is you don't need a ton of money to start investing either. For instance, some Robo-Advisors allow you to start with as little as $5! Don't let fear or lack of knowledge hold you back.
We offer a completely free investing course that will help you get educated on everything you need to know to start making your money work for you!
How to get ahead financially in your 50s
To get ahead in your 50s, you can follow everything from your 40s, plus even more tips, like these:
1. Create a get out of debt plan
Use this time, while you’re likely still working, to create a plan for your debt. Many people in their 50s have multiple debts, such as a mortgage, car loan, credit card debt, and even student loans. Before you retire, it’s essential that you develop a plan to get rid of these debts.
As with most financial goals, the first step to getting out of debt is understanding what you owe. There are many ways to create a debt-free plan. For example, you could pay off the debt with the highest interest rate first, or the one that gives you the most anxiety, and keep on going from there.
2. Develop a retirement plan
Is retirement something you think about daily, dream about for “someday,” or haven’t given a thought to? Wherever you stand on the spectrum, your 50s is the time to put some thought into what you want retirement to look like.
You should start asking yourself some key questions, such as: Where do I want to live when I retire? When do I want to retire? Will I still have an income or a job (a side hustle, perhaps) when I’m officially retired? How much do I need to retire?
You can use a retirement calculator to estimate how much you will need to retire comfortably. From there, you can start to develop a plan. It doesn’t have to be set in stone yet, but you should begin to have an idea of what your retirement will look like, so you can start to plan how much it will cost.
3. 401(k) catch-up contributions
Hopefully, if your company offers one, you’ve been contributing to your 401(k) for many years. Whether you have or not, at age 50, you can start contributing even more to your 401(k) than ever before. That’s because of something called the “catch-up contribution.”
According to the IRS, anyone over 50 can contribute an extra $7,500 to their 401(k) in addition to the normal limit of $23,000 for 2024. This is a great way to take advantage of a tax benefit and boost your savings before retirement.
How to get ahead financially in your 60s
Your 60s are by no means too late to get ahead financially. There’s no better time to check in with yourself and ask yourself, “How am I doing financially?” than right before you plan to retire. Follow these tips to ensure a financially secure retirement:
1. Live on your retirement budget now
Your retirement budget is likely to be lower than your current budget, especially if you are still working full-time. Even if you plan to spend less money in retirement, it’s a good idea to practice living on your actual retirement budget before you need to.
Lower your spending and see how it feels. Will you be happy living within that budget when you retire?
There’s still time to make adjustments to your retirement budget while you’re still working. For example, you might decide to cut back on your current expenses, rethink your retirement expenses, or decide to extend your working years a little longer.
2. Delay collecting Social Security
Social Security can be a complicated benefit to understand, but it is worth learning about to get the most out of what you are entitled to. In general, you can start taking Social Security at age 62.
However, if you wait until your “full retirement age” (either 65 or 67, depending on certain factors), you can get an even larger benefit. Further, if you wait until even later – age 70 – you will get the maximum benefit.
While everyone’s financial situation is different, and for some, taking the benefit as early as possible is the best move, if you can, by waiting until you hit 70 to collect Social Security, you’ll get the most out of the benefit.
3. Rebalance your investment portfolio
As you approach or enter retirement, it’s a good time to think about your asset allocation. In the upcoming years, you’ll probably be planning to withdraw from your investment assets to replace your income.
What does it mean to rebalance your portfolio? Broadly speaking, it’s selling and buying stocks and bonds to make sure the allocation and, therefore, the risk, is where you want it to be.
It depends on your age, but, in general, as you get older, you want a less risky investment portfolio. For example, someone at age 65 might strive for an asset mix of 90% bonds and 10% stocks, while a 30-year-old would have the opposite mix – more stocks than bonds.
If you’re wondering how to make these decisions or how the mechanics of selling stocks and bonds work, a good place to start is by educating yourself on investing. You might also want to reach out to a financial professional to help you strategize on how to meet your specific retirement needs.
4. Bring in extra income
If you’ve reached your 60s and don’t have as much saved or invested as you’d like, it’s definitely not too late to catch up. There are additional ways to bring in extra income that you should keep in mind, even after you’ve retired.
Why not use this time to start that side hustle you’ve always been curious about? Or consider other ways to increase your income, such as working part-time in a new industry, decluttering and selling your stuff, or exploring passive income ideas.
How to get ahead financially at any age
Lastly, there is one tip that you can take advantage of no matter your age: be proactive about your finances. Once you’ve done a financial health check-up, don’t stop there. There are ways to move forward no matter your situation, but it takes some work.
Commit to educating yourself about personal finance. Take one of Clever Girl Finance’s 100% free courses, buy a book on investing, or reach out to a financial advisor. Whatever you decide to do, don’t stay stuck, because taking action is the best thing you can do for yourself.
You can get ahead financially no matter what age you are!
Now you know how to get ahead financially no matter what stage of life you are in! Remember, getting ahead financially takes work.
But it’s available to anyone, at any age. It doesn’t matter what you did or did not do in your 20s or 30s. It only matters what you commit to doing now and in the future. So, make it a goal to start taking steps now to get ahead financially!