6 Smart Money Moves to Make in Your 40s

By Ellevest Team

You’ve probably got some serious momentum going now that you’re in your 40s. You might own your home, have likely hit something at least resembling a stride in your career (and, if applicable, in parenthood). And you may be earning a higher income than you ever have before (more on that in a sec).

So, how can you harness that momentum and make the most of your money in your 40s?

1. Adjusting for your lifestyle

If your salary’s gone up recently, don’t be afraid to spend on things that make life more comfortable (within reason, of course). A little lifestyle bump when you get a raise is natural — and well deserved. But it can be hard to move in the other direction if something were to damage your (or your family’s) earning power. So keep one eye on how you’re tracking toward your saving and investing goals, and tweak your spending habits if you need to.

Another way to put more money toward your goals is through cost reductions. For example, if you had children in your 20s or 30s, they might now be in school, or off to school soon. That could mean less to pay for full-time childcare.

One thing not to do with extra cash, though it can be really tough: Try not to prioritize saving for your kids’ education first on the list if you aren’t on track for your own retirement. Scholarships, grants, and even student loans can help your kids — but your retirement’s all on you.

2. Speaking of which: Zero in on retirement

When we surveyed 1,000 women about their money goals and habits*, 71% of those in their 40s said they were saving for retirement. That’s totally awesome. But now’s a good time to make any necessary adjustments so you can get as much bang for your stashed-away bucks as possible.

As your income goes up, bump those contributions up, too. The closer you get to retirement age, the harder you should typically be hustling to max out your different tax-advantaged accounts.

Keyword: Your. Women retire with two-thirds as much money as men and live six to eight years longer. Also, 90% of women manage their own money at some point in their lives. You gotta have your own thing, and you gotta give it the attention it deserves. (As we like to say, It’s called an “Individual” Retirement Account for a reason.)

But how much are you actually aiming for? That depends on a lot of things, not least of which is how much you’ve saved so far and how far you still need to go in the next 25 years or so. We recommend aiming for a target annual retirement income of 90% of your pre-retirement salary (including inflation, taxes, etc.). That’s a higher goal than you might see recommended elsewhere, but we’re betting that you’re going to want a nice cushion — for both fun and emergencies.

Getting that exact number is where we can help. Ellevest uses your current retirement account balances, contributions, age, salary, earning power, and gender (for us women, that typically means more career breaks, a longer lifespan, and lower salaries that peak earlier in our lives) to help you make a plan.

And here’s the thing about your projections with Ellevest: We’re not here to give you a false sense of security. Others might show you a slightly bigger forecast … but with just a 50% chance of actually hitting it. Not us. We’re here to help you actually plan your future, based on what we believe are more realistic projections. Ellevest crunches the numbers on hundreds of market scenarios to show you a projection with a 70% chance of hitting it — or better*. (You can read more about our “you-focused” approach here.)

3. Protect your #1 most valuable asset

Your house? Nope. Your retirement accounts? Guess again. Your #1 most valuable asset is you … you, and your earning power. If you don’t already have them, now’s a good time to look into supplemental (aka not through your employer) life and long-term disability insurance. This is especially true if you have other people depending on your income.

Disability insurance

The Social Security Administration says that 25% of people will become disabled at some point in their lives. But still, the vast majority of Americans don’t have disability insurance, which replaces at least part of your income if a disability keeps you from being able to work. Your ability to earn income is critical. Without it, you or your family could end up in a serious financial pinch.

Some people get limited disability insurance through their employer, but a supplemental policy will bridge the gap between whatever that pays and the income you’d need to sustain your current lifestyle.

If you don’t have disability insurance through work, you can also get your own base policy. And if you’re planning to leave your job soon, especially in favor of self-employment, think about adding a “future purchase rider” to your supplemental policy, which would give you the right to easily purchase a base policy if you needed it.

If you’re a freelancer, contractor, part-timer, etc., you can also look for a group policy through other organizations, like professional associations, trade groups, or alumni associations. They can be much more affordable than individual policies ... and might even be worth the annual membership dues given the amount of savings.

Life insurance

Your life insurance policy should be big enough to cover any beloved humans who rely on your income. And also: Debt — like a mortgage or private student loans — doesn’t necessarily go away in the event of the borrower’s death. So you’re going to want a big enough policy to cover those things (as well as the cost of a funeral, which can be significant).

The term policies some employers offer (typically 1–2x your annual salary) are almost certainly not enough; the industry recommends 7–10x your salary as a guidepost, but that number should be adjusted based on you and your family’s needs. The good news is that term life insurance is generally pretty affordable (although premiums do tend to rise with age).

There’s also “whole life” (or “permanent”) insurance. It covers you for (wait for it) your whole life. It’s usually more expensive, and it often builds up a “cash value” (ie, you can cash it out) as you pay premiums. Whole life might be right if you want to use your retirement savings to live like a boss and still leave an inheritance behind. (That’s where that cash value might come into play.)

4. Get that bread

Women’s salaries are most likely to peak when they’re in their 40s … but men’s salaries keep growing into their 50s. It’s infuriating, but it’s statistically true, so now’s the time to grind to keep up. Consider enrolling in courses to keep your skills sharp. Negotiate hard to get paid what you’re worth.

Or maybe you’ve always dreamed of doing your own thing. Now could be the time: The Census Bureau and MIT found that for the most successful start-ups, the average age of the founder was … 45. In fact, a 40-year-old startup founder was more than twice as likely to found a successful startup than a 25-year-old. Ellevest CEO Sallie Krawcheck dubs this stage of women’s careers “The Third Act” — when the most exhausting parts of raising kids are behind you and the world is your oyster.

5. Talk money with your parents

This is the age when a lot of people’s parents are close to retiring, or maybe they’re retired already. So if you haven’t had the what-are-your-money-plans-in-retirement talk yet, now’s the time. It’s highly likely that their plans are going to intersect in some way with your plans.

Nearly a third of adults end up providing financial support for their parents. But even if they don’t need help, you could be in for some surprises. Maybe they’re planning to sell the house you thought you’d inherit. Or maybe they’re planning to move somewhere expensive to travel to, meaning you’d need to budget for holiday visits. It’s good to get these details now so that you can plan appropriately.

Other useful information to find out: Is their house paid off, and do they have any other debt? What are their plans for long-term care, and do they have long-term care insurance? Life insurance? Where do they keep the documentation for all these things?

6. Grow your net worth

Ellevest is a goal-based investing platform, which means most of our investment portfolio options are built to help you save a certain amount by a certain deadline (retirement in 20 years, a down payment on a house in six years, etc.). But one of our goals is to “Build Wealth,” meaning it’s designed to just help your investment portfolio grow as much as possible.

In our survey, women in their 40s were most likely to tell us that investing to grow their net worth was a priority. Allow us to just say: Heck. Yes. You work hard for your money, and you earned it. It’s yours to use however you want. To grow it so that your future self (or your kids, or your parents) can live even more comfortably. Or to build it into your legacy, whatever that means to you.

So go out there and give it everything you’ve got. We have a feeling you’re up for the challenge.


The Ellevest 2018 Money Census (the “Census”) was conducted online between November 3-10 2017 in conjunction with Chadwick Martin Bailey. Base: Women (1,034), Men (1,009), Women of Color (231), Non-Women of Color (808), LGBTQ (200) and Non-LGBTQ (968). Participants are US residents who range in age from 22-65, more than 90% of whom are above the age of 30. All participants represented having personal incomes of $50,000 or greater and were involved in managing their personal or household finances. Not all questions were answered by Census participants. The Census was funded by Ellevest.

We compare the outcomes of a 30-year-old woman saving 10% of an $85,000 starting salary for 37 years in a savings account with the outcomes associated with investing those savings in an Ellevest account. We assume her annual retirement goal is $125,550 in future dollars. We assume the savings account yields a 1% average annual cash return and has no account fees. For investing, we assume an investment with Ellevest (including fees) using a low-cost diversified portfolio of ETFs beginning at 91% equity and gradually becoming more conservative during the last 20 years, settling at 56% equity by the end of the 40-year horizon. The likelihood results are determined using a Monte Carlo simulation—a forward looking, computer-based calculation in which we run portfolios and savings rates through hundreds of different economic scenarios to determine a range of possible outcomes. All simulation results include the impact of inflation, and taxes on interest, dividends and realized capital gains.

© 2020 Ellevest, Inc. All Rights Reserved.

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Ellevest Team

Ellevest helps women build and manage their wealth through goal-based investing, financial planning, and wealth management. Our mission is to get more money in the hands of women.