PLANNING
What you should be doing
in your 40s
You are likely to come close to realising your maximum earnings potential when
you reach your 40s.
However, you will probably also be at your maximum
level of spending too, with the biggest outlays coming
through mortgages, school fees and foreign holidays.
It is also in your 40s that you are likely to begin
thinking about retirement and with this may come an
element of panic.
The same objectives and asset allocation rules
apply to people in their early 40s as to those in
their 20s and 30s – it is all about growth,
maximising contributions and accumulation.
With the age of retirement stretching out for longer
and longer, the likelihood is that retirement could
conceivably be 30 years away, but is probably at least 20.
As you hit 47, the amber light may come on as you
start asking yourself questions about whether you are
putting enough away. If you are thinking about retiring
earlier, you may consider altering your asset mix.
In terms of objectives, this is when retirement savings
should really be maximised and in addition to
putting money into a pension, you should be looking
at ISAs and even VCTs, especially if you are getting
near to your lifetime allowance (LTA).
As pension rules have changed as well, it is likely many
people will want to see their pension pot continue to
grow. So, it still comes back to long term growth. This
means sensible asset allocation, taking into account
different asset classes and regions. With growth being
the objective, the most natural home is equities.
However, although high risk may bring high rewards,
it is not for everyone, and there is room for equity
income as part of an accumulation strategy