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Should you get financial advice in your 40s? Here’s eight things you need to consider now


Being in your 40s can be a financial turning point – as a general rule, household finances are in a better shape. 

This can be for a number of reasons, such as reduced debt, closing in on ending mortgages, savings and investment pots building up, higher salaries and overall being savvier with money.   

It’s an important decade as this often marks the halfway point between entering the workforce and retirement age. 

Finances in your 40s: Are you financially fit at 40 or do you still have some way to go? 

While you may be better off than you were in your 20s there are still mistakes you could make that may undo all the hard work that has got you to this point.

The investments and financial products you take out now will have a great impact on retirement nest egg. 

Here’s eight things you should ask your financial adviser to ensure you stay on track with your financial goals.

1. Pension goals

One of the main reasons to contact a financial adviser when you’re in your 40s is so that you can ensure you’re on track with pension savings.

People generally delay saving for retirement or underfund pension pots. 

Fewer than two in five people are on track to achieve the moderate level of income highlighted by the Pension and Lifetime Savings Association (PLSA) retirement income targets, data from Hargreaves Lansdown shows.

Reena Mistry, a financial adviser, says emergency funds are vital and should cover four to six months' expenses

Reena Mistry, a financial adviser, says emergency funds are vital and should cover four to six months’ expenses

The PLSA standards say a single person would need a retirement income of £20,800 per year to achieve a moderate standard of living while a couple would need £30,600. 

This includes the state pension which can be worth up to £9,340 per year per person.

There are many factors to consider when it comes to your pension. 

Pension savings should be determined by the age that you want to retire, how much you expect you’ll need in retirement and what other assets you have that could contribute to your income.

If you don’t have a pension set up yet, you should first become a member of your employer’s workplace pension. 

Reena Mistry, a financial adviser, says: ‘As an employee, you are automatically enrolled into a workplace pension scheme if you meet certain criteria.

Adam Walkom, partner at Permanent Wealth Partners adds: ‘Many employers offer a “matching” scheme where they will increase their contributions if you do yours. These are normally great.

Life Insurance – this is important for several reasons; if you have a mortgage, it will ensure the mortgage is repaid on death 

 Reena Mistry – financial adviser

‘The big caveat with all pension contributions is that you cannot touch these funds until you’re at least 55, so whatever happens they’re stuck in there. 

‘Now, that’s fine, but people need to be aware of this so they don’t over-contribute just to be tax-effective and leave themselves stuck.’

If you’re self-employed, you can set up your own pension fund. 

Mistry adds: ‘Outside of this, there are plenty of other options which a financial adviser can guide you through based on your affordability.

‘The amount you put in depends on how much surplus income you may have, but no matter what the amount, the important thing is to start a pension and start contributing.’

2. Ask about setting up an emergency fund

Everyone, regardless of age, should have an emergency fund to fall back on. This will help to ensure you don’t take money from other vital pots that should be dedicated for other things like your children’s tertiary education fund.

Mistry says: ‘The emergency fund should be in the region of four to six months’ expenses, and this provides an important buffer should anything unexpected arise.

‘If you don’t have an emergency fund, you can start to build this up by putting money towards this each month. 

‘By carrying out an exercise to see what your income and expenditure is, this will give you a good understanding as to how much money you can start putting aside for savings, investments, and pensions.’

Find a financial adviser

This is Money has partnered with Flying Colours Life to help readers find an adviser. It specialises in financial lifestyle planning and helping people to find high quality trustworthy advice. 

Flying Colours Life’s approved advisers offer a free no-obligation consultation, so you can work out if they can help you.

>> Find a financial adviser 

3. Ask about life insurance

Another reason to consult your financial adviser in your 40s is to ensure you have enough life cover. 

Mistry says: ‘Life Insurance – this is important for several reasons; if you have a mortgage, it will ensure the mortgage is repaid on death. 

‘If you have a loved one or a young family, it could provide them with a lump sum on your death, which they can use as they see fit.’

If you don’t already have life cover, you should think about taking it out now. 

The earlier you take out life cover, the cheaper it is. 

If you delay further, the premiums are only likely to get more expensive as you get older and are seen as a higher risk.

4. Check your income protection

Adam Walkom partner of Permanent Wealth Partners says he can only see interest rates heading in one direction - up

Adam Walkom partner of Permanent Wealth Partners says he can only see interest rates heading in one direction – up

According to Legal & General, the average person is only 24 days away from the breadline, living month to month. 

It means that should illness strike many are in danger of slipping into debt if they can’t survive on basic sick pay.

A Caspian Insurance spokesperson points out that Brits are at ease with insuring their homes, contents, holidays, and phones but adds that a one of the most important assets – our salaries – are often left unprotected.

Speak to your financial adviser to find out how much income protection cover you need.

5. Estate planning

Estate planning is vital at this point as you’re likely have major assets and even dependents who’d need taking care of should you pass on.

Mistry explains: ‘If you have young children this is vitally important. You can appoint a guardian to look after them should both parents pass away before the children turn 18.

‘If you have assets that would need to be distributed on death, then a will would ensure it is done according to your wishes, and it also makes it easier for your loved ones to carry out your wishes.’

6. Make sure you have the right savings vehicles

By now you should be making regular contributions into a pension as well as other savings vehicles like Individual Savings Accounts.

If you don’t have these in place, it’s not too late to start and get advice on where to invest. 

Mistry says: ‘Isas are a tax efficient way of saving surplus income, which can be used towards a number of things such as a deposit for a house, children’s school fees, or can be used in retirement.’

7. Have you got the right mortgage product?

By now, if you’re a homeowner, you may already be some way into paying off your mortgage, but some people in their 40s could just be starting out in the property market. 

Regardless of where you are in the house stage it’s vital to make sure you’re getting a good rate, particularly now as rates are going up.

Walkom says: ‘I can only see interest rates heading in one direction – up – because the long-term average is well above where we are today. 

‘I think people should use that as part of their decision making when thinking about mortgages.’

8. Find out if you have enough insurance cover

Your 40s is also a good time to revalue your insurance cover and ensure that you have adequate insurance for all your contents and assets. 

A good financial adviser will be able to assess whether you are overpaying or underinsured. Both scenarios will leave you out of pocket.

Heed the advice

You may think that as you’re in your 40s you may have most things sorted financially. 

But it could be worth consulting a financial adviser to ensure you’re on the right track.

This could be one-off advice for a financial health check: Want a piece of one-off financial advice? Here’s what should you ask for and expect to get… and how much it might cost.

It could also be worth doing a midlife financial MOT check: Is a ‘midlife money MOT’ worth it? 

Mistry adds: ‘A financial adviser can help with all the above, as well as planning for your children’s school fees and university fees, structuring your investments tax efficiently, setting up trusts, helping with inheritance tax planning and helping business owners with an exit strategy.’

We were worried we’d let things drift financially in our 40s… 

Oliver and Claire White (pictured) were both worried they'd let things drift with their finances

Oliver and Claire White (pictured) were both worried they’d let things drift with their finances

Oliver White, a partner at a law firm in London and Claire White, a part-time teaching assistant have three children aged nine, six and two and live in West London. 

To highlight the role of a financial adviser, Adam Walkom talks his through his three-point plan with them.

He says: ‘They were scared they were just going to let things drift. 

‘They didn’t want the scenario of putting their heads up for air in 10- or 15-years’ time and having nothing left to show for all their hard work.’

Walkom says that there were three main actions that the Whites’ needed to make, including:

1. Constructing a plan

Walkom says he asked the Whites what they wanted their future to look like. He says: ‘We imagined their ideal future scenario. Where are they? What are they doing? What is that going to cost?

‘We captured all this information and built a financial model for the Whites that shows in as much detail as possible their current and potential future states.

‘Oliver and Claire really liked this as it gave them a strong sense on where they are today and what they need to do in the future.’

2. Dealing with the risks

Walkom then went about constructing a ‘safety net’ for the Whites’. He says: ‘We made sure Oliver and Claire reviewed and updated their will and started considering a power of attorney for each other.

‘We increased the life cover for Oliver and put Claire on the policy as well. We also added another £100,000 critical illness cover which will pay out a lump sum if either of them because seriously unwell.

‘We allocated some of their future monthly income surplus to build a safety net of cash. Oliver and Claire agreed around £50,000 was appropriate for this figure.’

3. Maximising growth

Maximising growth involved a review of the couple’s ISAs (individual savings accounts) and pensions. Claire’s old pension and Oliver’s current employer pension were both invested in the default funds.

Walkom says: ‘On review those funds were not performing well, so we switched their funds into low-cost 100 per cent equity tracker funds. Why 100 per cent equity? 

‘Because realistically Oliver and Claire will not be touching these pensions for 20+ years. In that time the compounding effect of higher growth from just owning equities (versus owning bonds and other lower-growth assets) will more than offset any volatility over the years.’

For their ISAs, Walkom reduced the risk a little more as he wanted them to be able to access the funds when they need to.

Walkom highlighted the need to make regular contributions, explaining ‘Regular contributions are also very important as it means you’re buying even on the down moves in markets, and it is in effect ‘saving while you sleep’ as you never see the money in your current account to spend.’ 

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