The 40’s are years of financial potential. According to the Reserve Bank of Australia (RBA), between ages 35 and 54 is the peak year of earnings. However, this may also be the age at when disposable income is at its lowest. Within this age bracket, household income tends to be allocated rather quickly. Taxes, home loan repayments, living expenses and possible additional costs of raising a young family or school fees.
Low disposable income may be a reality, but at the same time, adopting simple financial planning strategies at this time may have a significant impact on your financial future.
It is likely that you will live longer than your parents. Australian life expectancies for both males and females are steadily increasing. At the same time, the working portion of the population is decreasing, meaning that less tax is being collected. In time, these two factors will further strain the Government’s ability to provide support such as the Age Pension and Healthcare. As a 40 something you will need to take control and plan for your future.
Strategies for consideration
W2 Wealth believes that there is much that can be done to help manage your finances and to help you build up a nest egg with which to fund retirement. The key strategies that 40 somethings should consider may include:
- Early planning – understand the numbers.
- Budgeting and cash flow management.
- Debt management.
- Tax minimisation.
- Superannuation.
- Protecting your income and assets.
- Regular non-superannuation investment.
The benefits of pre-retirement strategies for 40 somethings
It is never too late to consider a financial plan. It need not be daunting. One, if not all, of the strategies listed above are likely to apply to you. The reality is that with up to 30 years to implement a retirement strategy, small changes and strategies can lead to big outcomes.