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1. Finally paying off your student loan debts

Hopefully, you’ll have this taken care of this long before you turn 40. But if you haven’t, you should plan to have your student loan debts paid off as soon as possible thereafter.

One of the big problems with student loan debts you’ve been carrying for several years is they start to feel like a “natural part of life.” You become oddly comfortable with them. You might be content to simply roll the debts over periodically and keep them going far longer than necessary, based mainly on the assertion that either the monthly payment or the rate of interest (or both) are low.

But student loans represent an obligation, and that cuts down on your future cash flow. No matter how low or tolerable the monthly payment or the interest rate may be, they should be gone by now.

2. Purchasing more life insurance than you thought you need

By the time you reach your 40s, it’s likely you're waist deep in dependents and/or financial obligations. That low-cost burial policy for $50,000 just won’t cut it anymore. You’ll have to have that plus a lot more to provide for your dependents in your absence.

In fact, it is generally true that your 40s and even 50s are the time in life when you need more life insurance than any other time. Not only might you have a family to support, but there may be college obligations coming up, as well as significant debts that will need to be extinguished if you are no longer around to cover them.

3. Having an estate plan in place

At a minimum, you should at least have a legally executed will in place that will clearly spell out the distribution of your assets, as well as the care of your dependents. Once again, this is where adequate life insurance becomes important. It will provide the extra layer of support your loved ones will need in the event of your death.

If you have a high-net-worth estate or one that will be created as a result of a large amount of life insurance, you should also look into setting up a formal estate plan. This can involve the creation of trusts upon your death that can be used to protect the assets in your estate and maintain adequate distribution of those assets for the support of your family as they are needed.

4. Maxing out your retirement contributions

It’s often difficult to do this earlier in your life, when you are trying to get yourself established, and particularly when you’re supporting a young family. But by the time you reach your 40s, you should be in a position to regularly max out your retirement contributions, whether that involves an employer-sponsored plan or an individual plan.

This will be especially important if you were unable to accumulate a large amount of money for retirement while you were in your 20s and 30s. Your 40s and 50s are the time to make catch-up contributions you couldn’t afford to make before.

5. Paying for your kids' college

If you have children, you should have a college savings plan set up for each child, at least by the time you turn 40. It’s likely they will be attending college while you’re in your 40s and 50s, and you will need an established asset base to help pay for their education.

You can do this through tax-advantaged 529 plans that are set up specifically for this purpose, or even through non-tax-sheltered plans such as a brokerage account or mutual funds. Even if you can’t cover the entire cost of their education, you should still plan to have a basic nest egg that will make college easier on your family’s finances.

6. Paying off your mortgage

Like student loan debts, it’s very easy to get comfortable with the idea that you’ll be paying a home mortgage for the rest of your life. But the sooner you can get it paid off, the easier your life will be and the more money you will have available for everything else.

You should think beyond the basic notion of owning your house free and clear. The extra cash flow that will be available after paying off your mortgage can help pay for your children’s college education and/or to fund your retirement. The sooner you get your mortgage paid off, the sooner you can take on these other financial goals.

7. Getting completely out of debt

We’re talking credit cards, auto loans and other installment loans here, in addition to your mortgage and student loan debts. It may be difficult to get out of debt completely while you’re still raising a family, but you should plan to be completely debt-free well in advance of retirement.

Not only will being debt-free lower your cost of living in retirement, but once again it will also provide additional cash flow to help fund your retirement portfolio.

8. Downsizing your life for retirement

By the time you reach your 50s, you should start to create at least a loose plan to downsize your life in preparation for retirement. Getting out of debt can and should be part of this plan, but you should also look at lifestyle choices as well.

First and foremost is considering the possibility of downsizing your home. Owning the same four-bedroom, 2.5-bath, two-car-garage house on half an acre of land you raised your family in may be a needless expense when you retire and it’s just you and your spouse. If you have a vacation home, can you sell your primary residence and move into it? Will you need two cars or can you get by with one?

You should begin to actively investigate the alternatives.

9. Setting up a long-term care policy

Most of us don’t want to even consider the possibility we will ever need long-term care, but by the time you reach your 50s, it’s something you need to seriously consider.

When it comes to long-term care, when you purchase it has a major impact on what the policy will cost. The younger you are when you purchase a policy, the less expensive the premiums will be. This is because the younger you are, the more time you have to accumulate cash in the policy before long-term care is likely to be necessary.

It’s not inexpensive coverage, but considering that people are living longer now than ever, it’s quickly rising to the level of a necessary expense.

10. Preparing for a retirement lifestyle

As you move past age 50, an unpleasant reality begins to take hold in your life. Anyone your age can become expendable. This happens in part because older workers represent higher premium costs in employer-sponsored health insurance plans.

Still, another reason is older workers are usually higher on the pay scale. Also, whether it’s fair or not, some employers have a preference for a more youthful staff. Whatever the reason, the likelihood of being phased out of your job increases with age.

For this reason, you should work on being ready to retire at some point past age 50. In a way, that makes preparing for early retirement something close to a necessity. You should be ready to retire, even if you have no plans to do so.

At a minimum, this can involve having a large enough investment base — in combination with the relatively low cost of living — to provide you with sufficient income to supplement a greatly reduced income from employment. It may never happen, but it’s best to be prepared just in case it does.

In a real way, the financial milestones you should achieve in your 40s and 50s are very much about getting you set up for retirement. That should put some real effort into accomplishing them.

About the Author

Kevin Mercadante

Kevin Mercadante

Freelance Contributor

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog,

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