What should your financial situation look like in your forties?

If there’s one thing that’s constant in your forties, it’s the realization that nothing is constant. You may have hit the goals you set in your thirties, you may have traded diapers for driving lessons, and you may be realizing retirement isn’t such a far-away goal. It may be tough to prioritize and triage financial tasks: Do you pay down your own student loan or aggressively save for your child’s future college tuition? Do you help your aging parents, and how do you do so while protecting your own retirement savings? Do your investment strategies still make sense, or might there be other options with your financial needs and current paycheck? If anything, each decade brings more decisions.

Here’s a breakdown of where to focus your time and energy on your finances – steps to take now and steps to think about. Tackling all of these can help give you some financial peace of mind now and in the future.

What to focus on now

Emergency funds

An emergency fund in your forties may need to be more robust than it did in previous periods of your life, but it’s also probably more clearly defined. For example, in your thirties, you may have loosely planned for baby-related expenses in your emergency fund, or priced out what it might cost if either you or your spouse might lose a job. In your forties, you may have a better grasp on your worth and your financial obligations.

This means you might be able to plan more precisely, without leaving as much room for guesswork. Consider aiming for six months’ worth of must-have expenses and adjust up, if needed, based on your comfort level.

You may want to stash this money in a high-yield savings account, or a short-term investment vehicle (remember, all investments are subject to risk). This money should be quickly accessible to you.

Retirement

In your twenties and thirties, you likely socked away a small percentage of your pre-tax salary in a workplace retirement account. While that’s a fantastic start, your forties are the time to get serious and create a retirement saving strategy that’s rooted in clear financial and retirement lifestyle goals.

This may mean aiming to max out your workplace retirement account, like a 401(k), or considering a Roth or Traditional IRA. Speaking with a financial planner can help you to better understand how you can maximize the potential for tax-advantages in your retirement savings, as you near retirement.

Life and disability insurance

The life insurance provided through your employer may or may not be enough to cover all of your life and disability insurance needs. Now is the time to take a closer look.

Use an online life insurance calculator to crunch numbers and determining how much life insurance you might need to protect your family. Many people choose coverage that might allow survivors to pay off remaining debt, send the kids to college, pay for future weddings, cover a nanny or daycare costs, and more. Life insurance, term life insurance specifically, can still be affordable in your forties. For example, a healthy 42-year-old woman can purchase a 20-year, $500,000 policy for about $30 per month.

Disability insurance is something you may want to consider at this stage in your life as well — especially because your ability to make a living is one of your most important assets, and protecting that is important.

Education savings

Whether you have young children or teenagers around the house, education planning is likely something that’s crossed your mind. A 529 plan to start saving for your children’s college education, or private K-12 education is one option you may want to look into, among other college savings plans.

You might also want to consider a Coverdell account, which is another tax-advantaged way to save for education expenses.

Financial goals

Know what you own and why you own it

This old saying applies to both your physical and financial assets. I believe it can also be rephrased to apply to personal finance in your forties: know what you want and why you want it.

Setting clear financial goals for yourself during this time of your life can make or break your financial situation. Having arbitrary goals that aren’t rooted in your values could derail your financial goals.

Have a conversation with your spouse or partner about what you want your future to look like and what financial steps you may have to take in order to make that happen.

My favorite question to ask clients is: If we were meeting five or ten years from today, what would have had to happen in order for you to be happy personally, professionally, and financially?

Your bucket list

We all have a bucket list of things we want to accomplish in our lifetime —  and now is the time to start capitalizing on yours!

For many of us (myself included), there are specific experiences we want to have with our family, our significant other, or on our own. In your forties, you may finally have the disposable income necessary to prioritize some of these bucket list items.

I firmly believe that experiences can be better investments than “stuff”. Prioritize the experiences that fall within your means before your kids grow up and start families of their own.

What to focus on soon

Early retirement planning

If you firmly believe that an early retirement is in your future, you need to start planning now about creating a retirement lifestyle budget, consider whether your current level of retirement savings will be adequate, and explore healthcare options to bridge the gap until you qualify for Medicare.

Encore career

More and more people are sidestepping traditional retirement and instead pursuing an “encore career.” This secondary career can start as soon as your forties or fifties, and extend well into your golden years.

Many people choose to pursue a passion-career that they left behind in order to climb the corporate ladder. I’ve worked with people who have successfully picked up freelance writing, photography, running a local business, and more. If this is something that interests you, you should start planning sooner rather than later to ensure that you’re financially prepared to launch into a secondary career.

Caring for aging parents

When you’re in your forties, you’re part of the “sandwich” generation. That is, you’re sandwiched between kids that may or may not have left the nest and aging parents who might need your help when they can no longer live on their own or financially provide for themselves.

Whether your parents are independent or not, consider how caring for them might fit into your lifestyle, your goals, and your financial plans. If you see parent care as part of your not-so-distant future, you may want to set up a separate savings account and contribute to it periodically. The account would be specifically intended for future family financial assistance, and even small contributions now could make a huge impact in the future.

Future health care needs

For most of us, health care needs change as we age. Depending on your retirement plan, your children’s medical needs, and history of genetic health problems, you may want to reconsider your coverage amounts or switch plan types at some point. You might also need to consider whether you might need to pay for long-term care at some point. These are good topics to discuss with your financial professional.

What’s on the horizon

Now we’re getting to the exciting part: deciding what kind of legacy you want to leave. You’ve spent a lot of years putting in the work to grow your career, achieve your goals, and to raise a beautiful family. Now you get to think about your legacy as you move into the next chapter of your life.

Legacy planning

Legacy planning and estate planning are often viewed as synonymous – but I view legacy planning as a much broader concept.

Planning your legacy goes beyond financially taking care of your spouse and children after you pass away. It’s also deciding how you want your wealth to make an impact on the world around you.

I’ve had clients that chose to set up scholarship funds at their alma-mater, dedicate a large financial contribution to build a school in a third world country, or incorporate charitable giving into their will. I think that when we spend in a way that aligns with our values, we live more fulfilling lives.

As you get closer to retirement, you have a more clear idea of what matters most to you. Construct your plans for how your wealth – however large or small – can leave a meaningful legacy long after you’re gone.

That’s a pretty amazing concept to start thinking about while you’re in your forties.

Mary Beth Storjohann, CFP® and Founder of Workable Wealth, is an author, financial planner and accountability partner working to help clients in their 20s-40s across the country make smart, educated choices with their money. Her recent accolades include the “Top 40 Under 40” by Investment News, “10 young Advisors to Watch” by Financial Advisor Magazine, and “10 of the Best Personal Finance Experts on Twitter.” She frequently appears on NBC as a financial expert and her expertise has been featured in The Wall Street Journal, CNBC, Forbes and more.