Jack Ma, a successful global leader, entrepreneur, founder and CEO of Alibaba Group Holding shares the inspiring timeline of life to follow. He says that before you’re 20, you should be a student, learn from experiences, and before you’re 30, you should have role models in your life that you follow and learn from. For the 40’s and 50’s, he states that you should focus on your passions, things you love to do and things you know best. After that, he proposes that you rest, and relax because now it is too late to change.
In the same context, the decades of 40s and 50s of your age are where you should be actively planning your retirement. If you have been actively working on your portfolios and investments, you should be well on your way to a comfortable lifestyle in your 60’s. However, there are still some key mistakes that people make in their 40s that can impact their future lifestyle and financial freedom.
Not Revisiting Your Portfolio
If you haven’t had the chance in these past years or decades to revisit your portfolio of investments, then today is the right time. Evaluate the amounts you have invested, the ROI (return on investment) you have gained, and then evaluate different investment options that you can utilize that provide you more ROI on your investment.
As you continue to get closer to your retirement age, you should monitor your portfolio more often to evaluate returns and risks. Your portfolio should be safe so that you are sure of your financial freedom in the future.
Not Finishing Off Debts
While people in their 20s and 30s rack up debt for various reasons like building a house, or getting a car, 40s is about making sure the debts are paid off. As your career peaks during this decade, it would be ideal to get rid of any debts that you have. This way you can continue with your financial freedom without having to dip into your savings, or investment, or paying the last of your income to pay off your loans.
Read More: 10 Financial Mistakes To Avoid In Your 30s
Not Thinking About Retirement Plans
Retirement plans are key towards building a great portfolio of investments. If you didn’t spend time during your 30s in building a retirement nest, then you should be considering it right now. You should revisit your goals regarding retirement and evaluate potential income that you would like to receive in order to live a comfortable life post retirement. To do that, you should put a certain income goal for the month, and then back track it to see how much investment you would need to make in order to achieve this goal. There are various systematic investment plan options that you can evaluate to reach this income goal.
Not Taking Care of Your Health
This is as much of a financial concern as much as it is a health concern. If in your 40’s you are not taking care of your health, you are definitely paving way for a difficult financial future. Medicines, hospitalization and healthcare becomes increasingly expensive as we grow older. This is because the list of diseases and medical concerns grow larger. Taking care of health today indicates a healthier lifestyle and better sustainability, hence, lesser financial burden when you’re older.
Not Reevaluating Insurance Options
If you haven’t yet considered your insurance options, or have a health insurance in place that you’ve never revisited, today’s the time to evaluate those policies again. Evaluate the plan’s coverage to see what facilities, tests, hospitalization and other coverage you’re receiving and consider talking to your policy provider for additional options as per your health. If you have not considered health insurance coverage yet, then you may be losing out on the financial advantage that you can get from them, while you pay your medical bills from your savings. Also consider a life insurance plan to ensure a safer financial future for your family.
Nothing Thinking About Real Estate
If you have a family of your own, or are living in a join family system, look into real estate options. Giving rental every month can be financially draining, and can be expensive, when similar monthly rental payments could help you procure a house or apartment of your own. There are several housing schemes within urban cities including Karachi, Lahore and Islamabad, that you might want to explore in order to evaluate real estate of your choice. Even if you do not move into a house of your own, having real estate property to build a home for future is a good option for your children.
Not Thinking About Multiple Generations In the House
At the end of the day, being in your 40s means tons of responsibilities towards the household. It inevitably also means that you have multiple generations living in your home, including parents, children and potentially grandchildren. Each generation has different financial needs and responsibilities generally fall on the adults to take care of these needs. Financial planning at this stage will help you identify each age group’s need, and then find out the type of income, saving, investment and retirement planning that you need.
Failure to plan your financial future can be severe if one doesn’t start in their 40s. Primarily, this is a result of the fact that once you near your 50s and 60s, income options begin to trickle down and expenses start racking up. This could be health, higher education, housing, and if nothing else, everything marred by inflation and rising prices. Start today and plan your financial future.