Jason Noble was recently featured on GoBankingRates in an article titled, “Your Complete Guide to Retirement Planning in Your 40s.”
GoBankingRates recently surveyed Americans about their retirement savings and discovered that around 12% of respondents didn’t start saving for retirement until ages 41 – 50, and another 25% hadn’t started at all.
As a CERTIFIED FINANCIAL PLANNER™ (CFP®), Jason Noble has a lot to say about retirement planning. First of all, you should start as early as possible. Secondly, by age 40, you should be seriously putting money away.
Don’t rely on Social Security
Over 20% of respondents told GoBankingRates they plan to rely completely on Social Security in retirement, and over 30% plan to rely on it for more than half of their income. However, others are skeptical. The majority believe Social Security either won’t exist when they retire (23%) or that it will offer much less than it does today (46%).
When it comes to your retirement plan, Jason warns against relying too much on Social Security.
“With the strain on Social Security, it’s expected to be depleted by 2035, according to the 2022 annual report of the Social Security Board of Trustees,” Noble says. “There could be a 20% reduction in Social Security benefits, which would mean someone in their 40s would really need to save even more to offset the risk.”
Analyze your cash flow
When working with someone in their 40s who’s just starting to save for retirement, the first thing Jason Noble does is figure out their cash flow. This means seeing how much money you earn, how much you spend and how much is left over. This exercise can help you gauge how much you can reasonably save.
Retirement planning in your 40s is do-able, but you’ll need to save more.
Jason points out how time changes the requirements when it comes to retirement planning. “For instance, a 25-year-old saving $15,000 a year and getting an 8% annualized return and retiring at 60 would have approximately $2.79 million by the time they retire,” Noble said. “Someone who is 45 and earning an 8% annualized return would need to save $95,195 a year to get to $2.79 million by 60 years old.”
You may find you need to cut back on your spending so that you can save more. Jason encourages clients to list their expenses and mark them with an E for essential or a D for discretionary.
“A 41-year-old couple I work with did this exercise and put a D next to Starbucks, which was $435 each month,” he said. “They bought a coffee machine and are now saving $400 extra per month. With an 8% annualized return and retiring at 65, that’s an extra $317,596, which has a big impact on their retirement plan.”
Paying down debt
For clients in their 40s, Jason Noble creates a plan to pay down their existing debts as part of their overall financial and retirement plan. He recommends first paying off any debts that have an interest rate of 6% or higher before paying off the rest.
“After participating in their company’s 401(k) plans to receive the full matching, as part of their financial plan I usually recommend putting the rest toward high-interest debt,” Jason Noble explains. “After the high-interest debt is paid off, we then take that same amount you were paying and put that money toward your retirement savings to get you on track toward your long-term goals.”
A comprehensive financial and retirement plan requires a lot of analysis and customized strategies to achieve your unique goals. It includes your portfolio of diversified investments, tax planning to mitigate taxes for both the short- and long-term, risk management to shift the negative impact of potential adverse events away from your family and over to insurance companies, and estate planning to ensure that your legacy and family wealth are protected.
Let’s discuss your retirement situation. Contact Jason Noble at (843) 743-2926.
Don’t miss Clear Picture Financial, Jason’s radio show and podcast every Sunday, where you will learn how you can protect your portfolio and stay on course with your long-term financial and retirement plans. Jason and his team help retirees, those who want to retire early, and business owners who are looking for a work-optional lifestyle.
Read the entire GoBankingRates article here.
Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd. Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”).