This is the third in a five-part series on financial decisions to make in different decades of your adult life. The first blog post addressed the issues most relevant to those in their 20s and the second blog post discussed topics relevant to those in their 30s. Now we move on to the subjects that are likely pertinent to adults between the ages of 40 and 49.

As we noted previously, these blog posts are intended to help you achieve a secure long-term future. One of the keys to achieving that is to invest as early as possible and adapt the habits that will maximize your chances of reaching your goals. For that reason, we “front-loaded” the suggestions we think are worthwhile in both your 20s and 30s. Ideally, you have done so. But be sure that you have by reviewing those two blogs first.

In your 40s, unless you have a career change or go through a divorce, it’s a matter of refining your efforts, so this post will be focused on the more tactical moves you can make.

Max Out Your Retirement Plans

At this point, you’re likely doing well enough in your occupation that you have more than enough to cover your costs of living and providing for your family. If so, be certain you are maximizing your contributions to your retirement plans. With a good 20 years or more of tax-free growth ahead, each dollar you put in can make a difference in what you’ll have once you are no longer working.

To add a small wrinkle of complexity, you may want to opt for a Roth IRA contribution rather than a tax-deferred option. As we said initially, the right financial move for you may differ from the assumptions we have made here about your career and personal circumstances. For instance, if your earnings in one year are lower than they normally are – beginning your own business, for example – you may want to pay taxes on the retirement contribution now rather than when you withdraw the funds when you probably will be in a higher income bracket.

Take Advantage of Health Savings Accounts

Another government-created vehicle that has tax advantages is one that often is overlooked: the health savings account (HSA). While it primarily is intended to help Americans cover medical expenses, it has three notable tax benefits: 1) contributions can be made tax-free, as with an IRA or 401(k) account 2) investments grow without incurring taxes on earnings and 3) withdrawals for qualified medical expenses also avoid taxes. Once you reach age 65, you can withdraw the money for non-medical reasons without a penalty fee, although you do have to pay an ordinary income tax on such withdrawals.

Ensure Your Portfolio and Risk Tolerance Still Match Your Goals

You may have heavily weighted your portfolio toward stocks when you were younger and benefited from their growth. Are you still willing to assume the risk they represent, compared to safer investments such as bonds? If you have ideas about an early retirement, now might be the time to move into investments that have less potential for loss than equities do. If you don’t expect to stop working anytime soon, you’ll likely want to stay invested in stocks.

Of course, this is highly individual, depending on each person’s circumstances and goals. But no matter what your situation, you’ll want to avoid a lopsided investment portfolio that could keep you from achieving the financial stability you seek. For instance, if you’ve concentrated funds in your company’s stock and benefited from its growth, now may be a time to sell off some of those shares and diversify into other holdings.

This blog post and accompanying video will explain more about stock options and how they fit into your overall investment plan:

https://lakeroadadvisors.com/stock-options-valuable-but-more-complex-than-you-might-think/

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).