By Vincent Birardi, CFP®, AIF®, Senior Wealth Advisor

 

Your 40s may often be considered a financial turning point. You’re likely in your peak earning years. But you also face competing priorities—mortgage payments, raising children, college savings, and possibly even caring for aging parents. At the same time, retirement is no longer a distant concept; depending on your goals and planning, it could be as soon as 15 to 25 years away.

This decade presents potential opportunities for helping accelerate savings, optimize investments, and protect your financial future. Here are 10 suggestions for building wealth in your 40s, starting with a deep review of what you own and what you owe.

Key Takeaways

  • Your 40s can be a key decade for accelerating long-term wealth. This is the time to assess your full financial picture, prioritize retirement savings, review asset allocation, and seek to protect your income and assets through insurance, emergency funds, and estate planning.
  • Disciplined habits can help meaningfully strengthen your financial trajectory. Avoid lifestyle inflation, automate and increase savings annually, manage debt, balance competing goals like college and retirement, diversify investments, and continuously monitor and adjust your plan as circumstances evolve.
  • Professional guidance can help align strategy with life stage and goals. HH’s CERTIFIED FINANCIAL PLANNER™ professionals and LifePhase Investing® approach provide tailored support across savings, investing, risk management, and long-term planning as you move through your 40s and beyond.

 

1. Begin Financial Planning in Your 40s by Assessing Your Current Position

Before making investment decisions, start with a clear picture of where you stand:

  • Calculate your net worth: Add up your assets like home equity, retirement accounts, and investments, and subtract your liabilities. These can include your mortgage, loans, credit card debt and other debt.
  • Review your retirement savings: Fidelity suggests having about three times your annual salary saved by age 40—and six times by age 50.[1]
  • Identify gaps: Compare your current savings to your retirement goals. If you’re behind, prioritize catch-up contributions.

2. Prioritize Your Retirement Savings

Retirement should remain your top financial goal—you can’t borrow for it like you can for college expenses.

  • Aim to save at least 15–20% of your household income (including employer matches) toward retirement accounts such as 401(k)s, IRAs, and Roth IRAs.
  • Maximize your contributions: In 2025, 401(k) limits are $23,500. When you reach the age of 50, you can add an additional $7,500 in catch-up funds each year.
  • Consider Roth IRA and/or 401(k) conversions: Tax-free withdrawals in retirement can provide flexibility and hedge against future tax increases.
  • Leverage Your Tax-Advantaged Accounts: Max out contributions to (tax-deferred) retirement plans before adding to your taxable investing accounts.

3. Review Asset Allocation in Your Portfolio

Your portfolio should likely balance growth—with a careful eye to risk management. Avoid placing “big bets” in any one stock or asset class:

  • Diversify: Include U.S. and international equities, bonds, and possibly real estate (REITs or rental properties).
  • Rebalance annually: Market fluctuations can skew allocations. Regular rebalancing helps keep risk aligned with your goals.

4. Manage Risk and Protect Your Assets

Your ability to earn income is generally your greatest asset in your 40s. Protect it by utilizing:

  • Insurance: Secure adequate life, disability, and umbrella liability
  • Maintain an emergency fund: Aim for 6–12 months of living expenses in a liquid account.
  • Don’t neglect estate planning: Create or update wills, powers of attorney, and beneficiary designations.

5. Avoid Lifestyle Inflation to Help Build Wealth in Your 40s

Higher earnings can often lead to higher spending. Combat “lifestyle creep” by doing the following:

  • Treat savings as a fixed expense.
  • Direct any bonuses and windfalls to investments and savings rather than to discretionary purchases.

6. Catch Up If You’re Behind—And Increase Your Savings Each Year

If you started saving and investing late or have fallen behind:

  • Automate your retirement contributions: Consistency matters more than timing. Even if your saving and investing is currently on target with your goals, why not automate? It can be one less thing to have to think about every month.
  • Increase Your Savings Annually: Even 1–2% more each year can help compound

7. Balance Competing Goals as Part of Your Financial Planning in Your 40s

Your 40s often involve juggling college savings for your kids and your own retirement goals:

  • Prioritize your retirement: You can borrow for your kids’ college expenses, but not retirement.
  • Use 529 plans for education funding: 529s offer tax-free growth for qualified education expenses; remember, though, that contributions to 529s are after-tax.

8. Explore Additional Investment Opportunities

Ways to invest money in your 40s? Beyond traditional retirement accounts:

  • Taxable brokerage accounts: For flexibility and potential long-term growth.
  • Real estate: Rental properties or REITs can help diversify income streams.

9. Monitor and Adjust Your Goals and Investments

Your financial goal plan should continue to evolve:

  • Review your goals annually.
  • Adjust the asset allocation in your portfolio as your risk tolerance and time horizon change.
  • Stay informed about tax law changes and annual contribution limits.

10. Common Mistakes to Avoid When Building Wealth in Your 40s

  • Ignoring debt: High-interest debt can erode your wealth-building potential.
  • Over-concentration of assets: Avoid putting too much in your employer’s stock or a single asset class.
  • Neglecting insurance protection: From life and disability coverages to umbrella and home insurance, don’t leave yourself vulnerable to a potential significant loss. A single event can derail decades of planning.

How Professional Guidance Supports Financial Planning in Your 40s and Beyond

While these considerations can help you build a strong foundation, you don’t have to go it alone. Working with a CERTIFIED FINANCIAL PLANNER™ professional here at HH is a great way to be able to consult with a trained practitioner in each of the above areas and receive targeted, professional guidance.

At our firm, CFP® professionals work with clients at every stage of their financial journey. Our LifePhase Investing® process is focused on your goals and current life stage. We’ll continue to adjust and fine-tune your investment strategy as you age beyond your 40s and move through life transitions.

 

Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser with its principal place of business in Long Beach, California. HH may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of HH, please contact HH or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com.

This blog is provided for general information purposes only. No portion of the content serves as the receipt of, or as a substitute for, personalized investment advice from HH or any other investment professional of your choosing. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy, or any non-investment related or planning services, discussion or content, will be profitable, be suitable for your portfolio or individual situation, or prove successful. Neither HH’s investment adviser registration status, nor the achievement of any professional designation, certification, degree, or license, or any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if HH is engaged, or continues to be engaged, to provide investment advisory services. HH is neither a law firm nor accounting firm, nor does it serve as an attorney, accountant, or insurance agent. No portion of its services, or this content, should be construed as legal or accounting advice. HH does not prepare legal documents or tax returns, nor does it sell insurance products. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if HH is engaged, or continues to be engaged, to provide investment advisory services. All opinions or views reflect the judgment of the author as of the publication date and are subject to change without notice. All information presented herein is considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.

 

[1] https://www.fidelity.com/learning-center/personal-finance/retire-better-40s

Have Questions? We can help. Talk to one of our Advisors today

Contact Us