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Forbes
a day ago
- Business
- Forbes
7 Smart Retirement Savings Moves To Make In Your 40s
Retirement savings strategies in your 40s Turning 40 is a significant milestone. It signals the midpoint of a career for some, achieving financial stability for others, and for many, it's a reminder that retirement is not so distant in the future. If you've reached your 40s and are wondering how to refine or even begin your planning, here are 7 retirement savings strategies that can help you. 1. Maximize Contributions To Retirement Accounts This decade is typically when Americans experience peak earning years. For example, according to latest data from the Bureau of Labor statistics, the two highest median weekly earnings in the U.S. are from the 35-44 and 45-54 age groups, which are $1,332 and $1,376, respectively. You should use this increased income for disciplined, strategic savings. If your employer offers a 401(k) or 403(b) plan, contribute at least enough to receive the full employer match. These matching contributions are free money, and over time, they compound alongside your own investments to significantly boost your retirement balance. This should be your minimum. But if you really want to boost your savings in your 40s, you should aim to contribute the annual maximum allowed by the IRS to all available tax-advantaged accounts. For example, in 2025, you can contribute up to $23,500 in a 401(k), and even though you do not qualify yet for catch-up contributions (reserved for those over age 50), having a max-out mentality ensures you take advantage of the opportunity. You may also explore traditional or Roth IRAs for tax diversification. You are allowed to contribute up to $7,000 to IRAs in 2025. There are certain limits and restrictions as to total contributions to IRAs based on factors such as modified adjusted gross income and marital status, but the idea remains the same: contribute the maximum amount allowed, if you can. Leave no opportunity unexplored for maximizing your retirement savings. 2. Balance Risk And Growth In Your Portfolio At this point, you are no longer in the early accumulation phase of your 20s and 30s, but you're also not yet in the preservation phase typically associated with age 50 onwards. That makes your 40s a unique time where you must weigh between continued growth and the need for stability. You still have time on your side (possibly 20 or more years until retirement), which means that equities and other growth-oriented assets should remain a significant part of your portfolio. Nonetheless, you should calibrate your exposure based on your risk tolerance, lifestyle needs, and long-term goals. Depending on your circumstances, you can aim for a 60/40 mix of stocks and bonds, or a target-date fund that automatically adjusts over time. Your 30s may have favored higher equity exposure, perhaps 80-90%, but you should dial down a little in your 40s and shift some to bonds, real estate, or dividend-producing stocks to enhance your resilience. Remember, this is not yet time to retreat to overly conservative investments, you still want to maximize the ability to grow your money and outpace inflation. But you also shouldn't chase high-risk returns without first understanding the downsides. Instead, focus on strategic diversification across asset classes, sectors, and geographies to build resilience and flexibility. You should also regularly rebalance and adjust based on changing circumstances in your family or career. For better guidance, consider working with a fiduciary financial advisor. 3. Be More Aggressive About Debt Elimination While not all debt is bad, high-interest ones, such as credit cards, personal loans, or payday loans, can be the bane of your wealth building and retirement planning efforts. Every dollar you spend on interest payments is one less dollar for your retirement savings. Eliminate these kinds of debt as soon as you can. If you are struggling with multiple debts, you may consider consolidation or refinancing to secure lower interest rates and simplify repayments. You may also use the snowball method and payoff the smallest debts first to build momentum. As you repay and eliminate high-interest debts, you should also focus on not incurring them in the future. For example, as your income rises in your 40s, you may be tempted to upgrade your standard of living, say move to a larger home, buy a new car, or travel more. Not that you should deprive yourself, but lifestyle inflation is one of the reasons you may incur new debt or delay wealth building. Temper your spending. Be more intentional about your retirement savings goals instead of short-term indulgences. 4. Strengthen Your Emergency Fund You should have one by now. If not, start immediately. Open a separate savings account that's dedicated to emergency spending, such as a job loss or car repairs. Most experts recommend having three to six months' worth of living expenses in your emergency fund. Aim for the lower end and gradually build toward increasing it. It may take time but even $100 per payday is a big step. Just save for rainy days. A small emergency fund is better than no emergency fund. This is a very important strategy for building your retirement savings, because having a robust emergency fund prevents you from incurring high-interest debt or making premature withdrawals from your retirement accounts. It's a crucial foundation of your overall strategy. 5. Plan For Future Healthcare Needs Healthcare costs consistently outpace inflation and often become one of the largest expenses in retirement. Address this now, while you are in your peak earning years, so you are not blindsided by bills later. One of the tools you have is a Health Savings Account, available if you are enrolled in a high-deductible health plan. Contributions to an HSA are tax-deductible, growth is tax-deferred, and withdrawals tax-free when used for qualified medical expenses. It is also prudent to understand the structures and limitations of Medicare, even though eligibility doesn't begin until age 65. Don't assume that Medicare will cover all your healthcare needs in retirement. It won't. There are gaps in coverage, including dental, vision, long-term care, and other prescription costs. You may want to consider having supplemental or long-term care insurance to address this, which are generally more affordable when purchased earlier. 6. Catch Up, But Don't Panic If you are just starting out with your retirement planning now, don't worry. While you may be behind on the ideal schedule, you still have time. Assess your current financial situation, including your income, expenses, existing savings, and outstanding debts. Based on this information, you can determine a savings rate. You may need to be more aggressive and ambitious, say 30-40% of your current gross income. This may require significant lifestyle adjustments. You need to rework your budget, delay major purchases, and forgo luxuries, but the results can be transformative. Compounded over the next 25 years, these contributions can bridge the gap between your current situation and a financially stable retirement. If you receive any windfalls, such as tax refunds, bonuses, gifts, or inheritance, use them toward boosting your retirement accounts, paying off debts, or strengthening your emergency fund. Catching up may also require you to make bold or uncomfortable decisions. Downsizing your home, relocating to a lower cost-of-living area, looking for a higher-paying job, or eliminating discretionary spending may all be on the table. What may be a sacrifice today is an investment for tomorrow. And when you are over 50 and eligible, make sure to maximize the catch-up contributions to retirement accounts, which is up to $7,500 for 401(k)s and 403(b)s and $1,000 for IRAs in 2025. Based on the SECURE 2.0 Act, you may also be eligible for higher catch-ups when you reach ages 60-63. Prepare for these additional contributions to your retirement accounts. 7. Avoid Common Pitfalls Inflation, longevity, and healthcare can make traditional retirement targets insufficient. Use conservative estimates and plan for at least 80-90% of your pre-retirement income. Consult with a financial advisor to better understand how much you need for a comfortable retirement and work out an appropriate plan. Social Security is helpful but it is not designed to fully replace your retirement income. Do not rely too heavily on it, lest you are left short. Get a personalized estimate from the Social Security Administration and incorporate it into a broader income strategy. A dollar today is worth more than a dollar tomorrow. Inflation erodes your purchasing power, and taxes diminish real returns. Plan and choose investments with these two things in mind. Explore strategies life Roth conversions or strategic withdrawals to maximize tax efficiency. Many in their 40s neglect to update their wills, designate beneficiaries, or assign powers of attorney. Keep in mind that estate planning is not just end-of-life preparation. It is an essential aspect of your financial plan. Seek the help of an estate planner or lawyer for better guidance and compliance with applicable laws. Life evolves. So should your retirement plan. So should your other financial plans. Regularly revisit your goals, risk tolerance, and financial situation. Make the necessary changes and be flexible and adaptive. Final Thoughts Your 40s are a decisive decade for retirement savings. Whether you've been contributing since your 20s or are only now beginning to think seriously about the future, the strategies above can help you achieve a comfortable retirement. The key is progress, not perfection. Through consistent and prudent action, you can make the most of the years ahead, and turn midlife into a springboard on your path to financial freedom. Frequently Asked Questions (FAQs) What should people in their 40s prioritize in their retirement strategy? Focus on maximizing retirement contributions, eliminating debt, maintaining a well-balanced portfolio, and building an adequate emergency fund. It's also an ideal time to address healthcare and insurance needs. How does retirement planning in your 40s differ from someone younger? Older? Compared to those in their 20s or 30s, you must be more intentional. Younger savers can afford more risk and have longer growth timelines. In contrast, those in their 50s and 60s often prioritize capital preservation and income planning. Your 40s are a transitional period requiring both growth and risk management. What are common risks/obstacles faced while saving/planning for retirement in your 40s? Major obstacles include high-interest debt, lifestyle inflation, lack of emergency savings, inadequate insurance coverage, and underestimating future needs. Many in their 40s also have substantial financial obligations like supporting children or aging parents. It's beneficial to consult a financial advisor for personalized guidance in retirement planning in your 40s, especially if you are just starting out. What should you prioritize if you are just starting to retirement plan at 40? Focus on having a high savings rate, ideally 30% or more of your income, while simultaneously eliminating debt and building an emergency fund. Use tax-advantaged retirement accounts and recalibrate your spending to accelerate your progress. How should your strategy shift, if at all, from your 30s to 40s? In your 40s, your focus should shift from aggressive accumulation to strategic growth with risk moderation. Portfolio rebalancing is very important. Estate planning and healthcare preparation should also be part of your considerations. Your 40s are the time to make up for any shortfalls and stabilize your trajectory for retirement.
CBS News
a day ago
- Business
- CBS News
Why a $10,000 short-term CD makes sense with inflation rising again
After the inflation rate barely moved from 2.3% to 2.4% in May, many borrowers held out hope that the increase was temporary. But those hopes were diminished this week after the Bureau of Labor Statistics reported another rise in the rate, up to 2.7% in June. That pushed the rate further away from the Federal Reserve's target of 2%, all but ensuring another pause in the Fed's rate cut campaign when it meets again at the end of July. And it could even wipe out the chances of a Fed rate cut when the central bank meets again in September, too. While this isn't the news borrowers had hoped for, it does offer savers an extended opportunity to take advantage of today's high rates in a strategic way. One of the better ways to do so is via a short-term certificate of deposit (CD) account. Specifically, a $10,000 short-term CD could be a smart way to capitalize on this latest inflation development. Below, we'll break down three reasons why a $10,000 short-term CD, specifically, makes sense with inflation rising again. Start by seeing how much interest you could be earning with a high-rate CD here. Unsure if a $10,00 short-term CD is the right move for your money now? Here are three timely reasons why it can be: Ahead of imminent rate cuts, savers typically don't have the luxury of shopping around to find lenders offering the highest rates and lowest fees. But now, with inflation rising again, savers will have a bit more time to shop around to find an ideal bank. As noted, rate cuts are essentially out of the question for July (the CME Group's FedWatch tool has a cut listed at less than a 3% chance now). And there's no Fed meeting scheduled for August. So, a rush to lock in a high rate isn't necessary. This is particularly important with a large, five-figure sum like $10,000. With this much money set to be locked away in a CD, you'll want to make sure you've picked the right lender. Fortunately, now you'll have a bit more time to do just that. Start shopping for CD accounts online now. Long-term predictions about the economy and, more specifically, about the interest rate climate are difficult to make right now. If inflation continues to rise, interest rates could rise with it. So you don't want to lock too much money away for too long, as you may have greater interest-earning opportunities in the coming year. But that's not a guarantee, either. Fortunately, short-term CDs will allow you to adapt more effectively to a changing economic landscape as accounts here will mature in 12 months or fewer. And flexibility is critical in today's economy and even more so when moving around $10,000. A top 1-year CD rate is 4.40% now or, put another way, $440 earned on a $10,000 deposit. But if you're looking for an account that will mature sooner, you'll have attractive options then, too. A 9-month CD comes with a rate of 4.26% now (around $318 earned) and a 6-month CD can be found with a 4.45% rate (approximately $220). While waiting for the economic landscape to shake out, then, you can still earn hundreds of dollars in the interim with the right short-term CD account. But not every bank will offer rates this high, with online banks frequently offering better rates and terms than those with physical branches. Consider starting with your local bank but be cognizant of the online offers, too, to better determine which makes more sense for your money now. A $10,000 short-term CD may not be the right choice for every saver currently. But with inflation rising and the chances of a rate cut that could impact CD returns diminished, now is a smart time to diligently shop for rates and accounts. A short-term CD offers savers flexibility to adapt to changing market conditions, thanks to a maturity date under one year all while allowing savers to earn hundreds of dollars worth of interest in the interim. So if you're looking to take advantage of what appears to be an extended pause in today's elevated interest rate climate, a $10,000 short-term CD offers a smart and effective way to accomplish that goal.
Yahoo
3 days ago
- Business
- Yahoo
Coffee prices are soaring, but not for the reason you think
How many price hikes are Americans willing to stomach for their morning coffee? Roasted coffee prices surged 12.7% in June compared to a year earlier, according to inflation data from the Bureau of Labor Statistics, while instant coffee saw a 16.3% increase. The retail price for a pound of ground coffee last month was $8.13, up about $1 since January. Still, demand isn't likely to go anywhere but up in the US, where Americans drink more coffee each day than bottled water. Instead, coffee drinkers may want to prepare for a future where prices ratchet up even further thanks to a combination of tariffs, rising global consumption, and climate change. Read more: Are tariffs costing us more? 'As a coffee lover, I wish $8.13 were likely a ceiling. I sincerely doubt it,' Chris Barrett, an agricultural economist at Cornell University, told Yahoo Finance. 'I don't know what might be in store because that depends an enormous amount upon weather in key growing areas. But given the tariffs that seem likely to go into effect over the coming month or so, it's unlikely prices are going to come down. They're likely to go up, perhaps quite appreciably.' Sign up for the Mind Your Money weekly newsletter By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy In April, President Trump set a universal 10% baseline tariff with higher "reciprocal" tariffs set to take effect Aug. 1. Trump has threatened Brazil, the world's top coffee producer, with a 50% tariff, while imports to the US from Vietnam, the world's second-largest coffee producer, are looking at a 20% tariff, Trump has said. Everyone wants coffee Last year, world coffee prices increased 38.8% from their average levels in 2023, according to a report from the Food and Agriculture Organization of the United Nations. Price increases in 2023 and 2024 were largely driven by adverse weather conditions in major coffee-producing countries like Brazil, Indonesia, and Vietnam and increased shipping costs, the report noted. 'Brazil is the biggest coffee producer in the world,' Barrett said. 'When you get a hot, dry period in the Brazilian coffee-growing regions, that depresses supply. We saw that last year.' Some growers have sought to plant at higher altitudes to mitigate the effects of warming temperatures and drought, even moving into areas that were traditionally used for tea production, Barrett said. But supply can hardly expand enough to keep pace, especially as demand increases in countries like China. 'The impact of prices globally really stems from increased demand and issues that coffee growers are facing, primarily related to weather conditions,' said Billy Roberts, a senior economist of food and beverage at CoBank's Knowledge Exchange research division. That demand for coffee is pretty steady, Roberts noted, so consumers are willing to spend a bit more when they have to. Higher prices may translate to consumers drinking more coffee at home, but 'consumers are going to continue to have their coffee — it's just going to be a question of where they're ultimately going to do so.' Read more: 5 ways to tariff-proof your finances Taylor Mork, co-founder and president of Crop to Cup Coffee Importers, a specialty coffee importer based in Brooklyn, noted that the 'real scary rise' in prices came when futures for arabica in New York — the world's most popular beans — soared past $4 a pound earlier this year. Coffee futures have since cooled from those record highs closer to $3 per pound amid expectations that world coffee production will be higher this year, though Barrett noted that futures have swung higher recently due to tariff concerns. In Mork's business, tariffed coffee imports are only just starting to arrive in the US, and tariff bills from US Customs are 'rolling in now quite steadily.' 'Our costs for quite a while have been up about a dollar a pound,' an increase of more than 30%, Mork said. 'That's pre-tariff.' Still, there are a few silver linings for coffee enthusiasts: The price differential between specialty beans and the cheaper stuff has been narrowing, Mork said. 'Even with these price increases, the portion of roasters and consumers that are purchasing high-end coffees — which are just getting more expensive — is not falling,' Mork said. Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at Sign up for the Mind Your Money newsletter Sign in to access your portfolio
Yahoo
3 days ago
- Politics
- Yahoo
Scott Jennings accused another guest of lying on air.
CNN host Abby Phillip chastised the network's MAGA mouthpiece Scott Jennings for 'derailing the conversation' after accusing fellow panelists of lying about the price of eggs. During a discussion about the price, Jennings repeatedly insisted that eggs have gotten cheaper since the inauguration of Donald Trump. But while the price of eggs has dropped since it briefly reached an all-time high in March, it remains up year over year, according to data from the Bureau of Labor Statistics. 'Price of eggs is down, 69 percent they're down,' Jennings asserted to Democratic strategist Julie Roginsky during a discussion on NewsNight With Abby Phillip Tuesday.
Bloomberg
3 days ago
- Business
- Bloomberg
US Producer Prices Stagnated on Decline in Services Costs
US wholesale inflation was little changed in June, restrained by a decline in services that suggests companies are absorbing at least some of the costs from higher import duties. The producer price index was unchanged from a month earlier, after an upwardly revised 0.3% gain in May, according to a Bureau of Labor Statistics report released Wednesday. The median forecast in a Bloomberg survey of economists called for a 0.2% increase. Excluding food and energy, the PPI was also little changed.
