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Financial Planning In Your 40s

Updated: Oct 9, 2023

Financial Planning In Your 40s

How one couple set out mid-life to build their wealth

How to sort out my finances now I’m forty…?

If this kind of thought has been running around in your head of late, you’re not alone. At ActOn Wealth, we often hear from Australians in their forties who start to worry about their financial future and security. We’re big believers that the best time to start is now, and certainly, your forties can be an excellent time to establish solid wealth-building strategies.

So, let’s meet real-life clients in their mid-forties and learn more about their life goals and how our financial planners helped get their wealth-building on track.

Does John & Sarah’s story sound familiar to you?

John and Sarah met with one of our Melbourne financial planners. They were in their mid-40s at the time. Homeowners with young children, they were both at the top of their income-earning potential.

Yet they weren’t managing their money strategically, and significant financial commitments loomed on the horizon. Anxiety was growing, and they didn’t know where to start.

John & Sarah’s financial challenges

John & Sarah faced several financial challenges:

  • Renovations to accommodate their growing family in what had become increasingly cramped living conditions

  • 25 years remaining on their mortgage

  • The children’s private secondary school education fees

  • Savings sitting in a low-interest cash savings account

  • Concerns they were not on track to finance their retirement savings goals

Although not presently a problem, the couple was also becoming increasingly concerned about how they would cope if one suddenly became ill or injured.

Questions to ask a financial advisor

The two came to ActOn Wealth with a substantial list of excellent questions.

  • Where should they allocate their surplus funds?

  • Should they make extra debt repayments, additional superannuation contributions, or ongoing contributions to an investment?

  • Or should it be a combination of these strategies?

Debt Management

  • Is their mortgage repayment on track for retirement?

  • Is their debt structured optimally?

  • Are they paying down the right debt, and are their interest rates competitive?

  • What are the tax implications?

  • Are they in the right superannuation fund in terms of fees and performance?

  • Is their investment mix within superannuation appropriate?

  • Should they make additional contributions?

  • If they are unable to generate income, will their family be financially protected?

  • What types and levels of insurance cover do they need, and how should they structure their insurance?

  • Would their surplus savings be better off invested?

  • What is the right investment vehicle for different goals, such as funding their children's education?

  • How much risk should they take, and what is their investment timeframe?

Tax Minimisation

  • How can they reduce their tax liability?

  • Are there any trade-offs or sacrifices involved?

  • Should they explore tax-effective structures like a family trust?

  • How can they minimise future tax liability on their children's inheritance?

Sometimes, clients don’t always know what questions to ask, which is fine. As part of our financial planning process, we undergo a deep-dive into your present finances, lifestyle ‘criteria’ and future goals. So, it doesn’t matter if you don’t know the best questions to ask a financial advisor. We eventually cover them all with you.

Financial goals for your 40s - what John & Sarah achieved

After working with an ActOn Wealth Melbourne financial advisor, John and Sarah were able to:

  • Gain a clearer budgeting and cash-flow structure, knowing exactly where their income was allocated in relation to their goals.

  • Put their mortgage on track to pay off in time for retirement, even with the additional costs from home renovations.

  • Reduced their interest expenses, freeing up more funds for other purposes.

  • Adopted a debt recycling strategy that reduced non-deductible debt and increased tax-deductible debt.

  • Aligned their investments with their specific goals, including saving for their children's education and funding the pre-superannuation retirement period, all while considering their risk profiles.

  • Obtained risk protection life insurance, ensuring they could maintain their cost of living and financial commitments in the event of illness, injury, disability, or death.

  • Switched to more suitable superannuation funds, significantly reducing ongoing fees by $3,274 per year.

  • Established a new superannuation contribution strategy that reduced their annual tax payable by $22,392 in the first year and $5,373 per year going forward.

John and Sarah are now well on track to meet their retirement goals. ActOn Wealth will continue working with them to ensure financial situation remains on course.

Interested to read more? Check out our blog about retirement planning in your 40s.

Contact our financial advisors in Melbourne today

If, like John & Sarah, you’re inspired to start financial planning in your 40s, contact our team of financial advisors and let’s plan to build your wealth from today.

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