A Financial Checklist for Turning 40.

This is the second post of my Turning 40 series. As I stated in my first post, I am turning 40 this fall. I read somewhere online that turning 40 is kinda like half-time in a football game. You have already played the first half and now you have to plan for the second half...of life. Hopefully I live longer than 80, but turning 40 is definitely a time to reflect on my future. But thinking of my financial future includes my husband, so this check list is really for both of us.



When will we retire? What do we want our retirement to look like? Will we stay where we live now? Do we want to become snow-birds and fly south in the winter? Will we travel? Will we work, volunteer, or both? Now is the time to dream a little.

A financial checklist for turning 40.

1. Get the debt under control. Our mortgage will be paid off in eight years, but we don't have a plan for our next vehicle when the need arises. And my husband's student loan is still out there sucking the wind out of my sail.
2. How much money will we need in retirement? Are we saving enough? I used this retirement savings calculator and realized that even though we max out our Simple IRAs, we may not be saving enough for when we retire. Be prepared, because the calculator will ask you questions like, "what percentage of current income do you want to replace?", "how much retirement income will you receive from social security and pension?", "how much retirement savings do you have now?" Do you keep the statement you receive a few months before your birthday from the Social Security Administration? That is where you'll find information about what they are projecting you to receive from Social Security.
3. Are our retirement funds allocated properly? I always thought I could accept some risk, but after watching our funds drop so much in the past year, I am not so sure. I didn't stop investing in our IRAs though, I guess I have been buying the funds on sale. I have always been a sucker for a good sale.
4. Will we contribute to our girls' college education? How much do we need to save?
5. When the kids start school full-time, will I go back to work full-time? See #1, #2 and #4...I'm thinking that is a YES.
6. What career path will I take? My work experience is in retail. I'm not sure I want to go back to that. I guess it is a good thing that I have a few years to ponder this question.
7. Are we properly insured with life insurance? Should we look into long-term care insurance? I can't be that OLD yet... am I?
   

We are left with more questions than answers, but a place to start. Why is financial planning a constant process??

To my 40+ year old readers out there, do you have any additional items for my financial checklist that I might be missing?

Turning 40 - The Series

• Preparining for my Big 4-0.
• A Women's health checklist for Turning 40.

Disclaimer: I am not a financial professional. Please contact a professional if you need help planning your future financial needs.

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Retirement Planning: Staying the course even when it hurts.

Recently I lamented to my husband about the massive nose dive our retirement accounts have taken. Contributing to a retirement account, whether it was my 401k at my previous company or my current Simple IRA, has always been a priority of mine. "I worked my %$&# off for that money" , I said to my husband, referring to my personal account. His reply to me was "why don't we get out of the market until the economy gets better." He continued, "why are we still putting money into our retirement if things are that bad."

His questions were fair especially since I was just complaining about our losses, but they jolted me back to reality. As much as I have the same concerns, in my heart I know that staying the course is the smart thing to do. If we pull out we will miss the wonderful opportunity to buy our funds on sale and watch our investments grow when the market rebounds. This sounds good in theory, but there are days I wonder when and if the market is going to get better. But historically, the market has rebounded and I am about 25 years from retirement so it would be foolish for us to withdraw our money and/or stop our contributions.

What I need to do is get my head out of the sand and look at our accounts. I have been avoiding my statements lately. Honestly it has been awhile since I really analyzed my retirement portfolio. Are our current funds in line with our retirement dates, goals and our current risk tolerance? Do I need to rebalance; what is our current mix? Am I paying too much in fees? Yes, maybe it is time to get my head out of the sand and accept reality. I'll never get this time back and in 25 years I don't want to regret not taking the time to spend on something so important.

We are not leaving the market; we will be staying the course.