Financial Planning in Your 40s | Cornerstone Series

Your 40s are the decade of reckoning. The financial decisions of your 20s and 30s are now visible in your net worth — and the gap between where you are and where you need to be is no longer abstract. Retirement is close enough to calculate seriously, but still far enough away to course-correct meaningfully. This decade demands honesty more than any other.

The clients who arrive at 50 in strong financial shape almost all share one thing: they used their 40s deliberately. They ran the numbers. They asked the uncomfortable questions. They made the adjustments before the window narrowed. This edition is designed to help you do the same.

Retirement

01
You know your retirement number and have stress-tested it. “I’ll have enough” is not a plan. Your retirement number is the capital you need on the day you stop working to sustain your lifestyle for 25 to 30 years, adjusted for inflation and the reality that retirement spending follows a curve — higher in the active early years, lower in the quieter middle years, and rising again in late retirement as healthcare and care costs increase. A plan built for a flat income throughout rarely accounts for either end of that curve. If you haven’t calculated this with an adviser using real projections, do it this year. Not next year.
02
Your retirement savings are on track for that number. Use the rule of thumb as a starting benchmark: by 40, you should have approximately three times your annual salary saved for retirement. By 45, approximately four to five times. These are not targets — they are indicators. If you’re materially behind, the corrective action is to increase contributions now, not later. The compounding window is narrowing.
03
You understand sequence-of-returns risk and your portfolio reflects it. As you move through your 40s, the asset allocation that was appropriate at 32 is no longer appropriate — the solution isn’t to become conservative across your whole portfolio, but to be deliberate about how much you’ll need soon versus how much can keep working for growth. Discuss your glide path with your adviser.
04
You have not raided your retirement savings in this decade. The two-pot system makes it easier to access your Savings Component. The temptation in your 40s — school fees, a home renovation, a business opportunity — is real. Every withdrawal is a permanent cost to your future self, taxed on withdrawal and robbed of its compounding potential. Protect it fiercely.

Protection

05
Your life cover has been reviewed in the past two years. Your 40s typically bring the peak of your financial obligations — a bond, school fees, a partner who may be partially or fully dependent on your income, ageing parents. Your life cover should reflect this peak exposure, not the amount you took out at 28. Have it reviewed with your current liabilities and income replacement needs in mind.
06
You have dread disease or critical illness cover. The statistical reality is uncomfortable: the likelihood of a serious illness diagnosis — cancer, heart attack, stroke — increases materially in your 40s. Dread disease cover pays a lump sum on diagnosis, regardless of whether you survive or can work. It covers costs that medical aid doesn’t — experimental treatment, home modifications, a period of reduced earning capacity while you recover. If you don’t have it, the time to obtain it is before a diagnosis, not after.
07
You have reviewed whether your disability cover reflects your current income. Income protection policies are typically set at a percentage of your income at the time of application. If your income has grown significantly in the past decade and you haven’t updated your cover, you are underinsured. A 30% income increase without a cover review means a 30% gap in your protection.

Estate & Legacy

08
Your Will has been reviewed in the past three years. Life in your 40s changes rapidly — second marriages, step-children, the death of a previously nominated executor, a significant increase in assets, a business interest. Your Will needs to reflect your current reality. An outdated Will is only marginally better than no Will at all.
09
You have considered a testamentary trust for your minor or young adult children. If you have children who would inherit before they have the financial maturity to manage a significant sum, a testamentary trust — established within your Will — ensures that the assets are managed by trustees you’ve chosen, on terms you’ve set, until your children reach an age you specify. Without this, a significant inheritance at 18 or 21 carries significant risk.
10
Your beneficiary nominations on all retirement funds and life policies are current. These assets fall outside your Will. They are distributed according to your nominations and the fund trustee’s discretion. If your nominations haven’t been reviewed since your 30s, do it this month. A change in marital status, the birth of a child, or the death of a nominated beneficiary all require immediate updates.
11
You have had a conversation with your partner about your financial picture — all of it. Both partners should know where the retirement funds are, who the advisers are, what the policies cover, where the Will is kept, and what the plan is if one of you dies or becomes incapacitated. Financial opacity within a marriage is a risk that tends to surface at the worst possible moment.

Debt & Lifestyle

12
Your home loan is on a trajectory to be paid off before retirement. If you took out a 20-year bond at 35 and haven’t made extra payments, it expires at 55 — which is manageable. If you’ve refinanced, taken out a new bond, or extended the term, revisit the math. Entering retirement with a significant bond repayment is a structural problem.
13
Your lifestyle cost is not inflating faster than your income. Your 40s often bring peak earning — and the temptation to upgrade everything that comes with it. Private schools, a larger home, a second vehicle. Each upgrade locks in a higher cost base that your retirement savings must sustain. Lifestyle inflation is the quietest wealth destroyer of this decade.
14
You have no consumer debt. By your 40s, credit card balances and personal loans should be a closed chapter. If they’re not, this is the most urgent item on this entire checklist — not because of the moral dimension, but because the interest rate you’re paying is almost certainly higher than any return you’re earning elsewhere.

The one question to sit with

If you retired today — not by choice but by necessity — what would your income actually be, and for how long would it last? Run the number. If it’s uncomfortable, that discomfort is useful. There is still time.

Worth Reading

Die With Zero

Bill Perkins

A deliberately counterintuitive book that argues against accumulating wealth beyond what you’ll actually use. Whether you agree with its conclusions or not, it asks the right questions about what money is actually for — and why your 40s is the decade to start answering them.

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