Between age 45-55, employees are usually earning the most of any point in their lives. However, despite the feeling of monetary security, it is crucial to have solid mid-life financial strategies. Expenses such as children’s college bills and funding retirement can loom large on the horizon, and it is important to make the most of these wealth-building years.
One of the best things that you can do to ensure financial security is to organize and diversify your portfolio. It is important to have a variety of stocks, bonds, equities or other securities. These monies should vary in risk, time horizons and return on investment. You should also keep your portfolio fluid, retaining the ability to rebalance it if one investment becomes too heavily weighted.
Another significant consideration is taxes. At this moment, you are likely in the highest tax bracket you will ever be classified in. Because of this, you should carefully consider making contributions to your employer sponsored retirement plan or an IRA. These pre-tax contributions will provide deferred savings opportunities down the road.
Finally, workers age 30-55 need to preserve the financial stability which they have built. Things such as life insurance and estate planning are crucial in the middle stages of life. Consulting a financial (and legal) professional can help you determine the best plan for your personal situation.
If you achieve these strategies, your mid-life years don’t have to be a period of crisis. Instead, they can be a time to enjoy an increase in wealth and disposable income, as well as an opportunity to implement successful plans for the next stage of life.