Just Getting Started

by: Catey Hill

Now that you're earning more money than in your 30's, consider taking full advantage of a 401(k) or 403(b) retirement savings plan at work, if you have one. You should also be sure your kids and husband or partner are names as beneficiaries for your retirement accounts. And if you've changed jobs, consider consolidating your previous 401(k) plan accounts.

Your 40's are likely to be a decade of completing demands, especially if you have children. You're earning more than in your 30's, but you now may need to save for your kids' future college bills and pay for their summer camps or lessons. And those credit card balances may be rising. So you'll need to be even more diligent about your own retirement planning. Consider these steps:

  • Live with your means - The less you owe to lenders and credit card issuers, the more you'll have to save for retirement. Try to avoid overcharging. The Wells Fargo Debt Pay Down Solution tool offers simple way to help you pay down your high interest debt. 
  • Consider taking full advantage of tax-deferred retirement plans - Now that you're earning more, try to save more, too. A good goal is to save 15% of your income each month. Our retirement savings calculator, My Retirement Plan, can help you come up with an estimate tailored for you. Find the most appropriate type of Individual Retirement Account for you and consider investing the maximum each year, If you have a 401(k) or 403(b) plan at work, set a goal of contributing more this year than last year and more next year than this year.
  • Consolidate your retirement accounts - By this point, you've probably had multiple jobs and multiple 401(k) or 403(b) retirement accounts from those employers. To help make managing these accounts easier, consider consolidating them all into one rollover IRA.
  • Create a suitable investment mix - Now that retirement is getting a bit closer, you'll want to consider taking less risk with your investments than in your 30's. By utilizing a suitable asset allocation strategy and diving your dollars among a variety of investments, you can decrease the likelihood that all the investments in your portfolio decline at the same time. Of course, by the same token, it's also unlikely that every investment in your portfolio would go up at the same time. Bear in mind that although asset allocation can help diversify your portfolio, it does not protect against fluctuating prices or uncertain returns.
  • Take care of the paperwork - If you have a family, help protect their financial futures by getting your paperwork in order. Double-check that the beneficiaries named on your retirement accounts are up-to-date. You'll also want to have these key documents drafted and current to be sure your wishes will be followed if you become incapacitated or when you die: general durable power of attorney, medical power of attorney, a living will, and a will. The legal-information website Nolo.com has excellent explanations of each in its Wills, Trusts and Estates area.
  • Work with a financial advisor - A financial advisor can help you plot a strategy and take advantage of the best ways to save for retirement.
Catey Hill is money editor for the New York Daily News online and author of SHOO, Jimmy Choo!

Source of Article: Wells Fargo: Beyond Today