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Considerations for Wealth Planning in Your 30s and 40s


Wealth planning at an early age is the key to a bright financial future. Stay on track with these wealth planning goals to focus on in your 30s and 40s.

Wealth planning in your 30s and 40s is very important and can help secure a bright financial future for you and your family. Because many people in their 30s and 40s are experiencing career growth or starting their own businesses, this is a good time in life to begin the financial and wealth planning process.

Financial Planning

This is a great stage of life to speak with a financial advisor and get a financial plan in place. This plan will certainly change and evolve over time, but starting this process at a relatively early age can help build wealth over time.

Financial planning in your 30s and 40s entails a number of factors that are dependent on your situation. This includes saving for retirement, protecting yourself and your family through estate planning, analyzing your insurance coverage and charting a path to overall financial security.

While this is an ideal stage of life to get a financial plan in place, it's important to recognize this is just the start of what should be a lifelong process. Your life and financial situation will evolve over time, and your wealth planning will need to be revisited and revised over time, as well.

Retirement Savings

While retirement seems a long way off at this stage of life, it’s important for those in their 30s and 40s to be saving for retirement, as the benefits of time and compound interest are huge advantages in achieving your retirement goals.

Maximizing retirement savings, including contributions to a 401(k), is critically important. These are essentially painless savings, as the contributions come out of each paycheck automatically.

As many people switch employers a number of times over the course of their careers, it’s important to manage all retirement accounts from these various former employers. By the time you’re in your 30s and 40s, you could have one or more old retirement plan accounts to deal with. It's critical that you don’t ignore this money, as it is a key part of your retirement savings.

There are a number of options to streamline your old 401(k)s, including rolling the balance into an IRA account or moving the money into a new employer's plan, if that option is offered. It’s important to take the actions needed to incorporate these funds into your overall retirement savings and investing strategy. 

Insurance and Estate Planning

At this stage of life, you may be either starting a family or have children approaching (or in) their teen years. Ensuring that your family is provided for in the event of your death or disability is a critical part of wealth planning at this stage.

Doing some basic estate planning is important at this time, especially for married couples with children. Beneficiary designations for retirement accounts and life insurance policies are crucial, as they determine who receives this money upon your death.

For those who have minor children, it’s important to name guardians for the children in the event of the untimely death of both parents. If you don’t name a guardian for your children, the courts will, and that person(s) may or may not be who you’d want to be taking care of your children if you were gone.

Life insurance should be considered, especially if there is a spouse or children to provide for in the event of your death. A term policy might be the best option, as it can provide a large death benefit for a relatively low premium for those in this age range with no major health issues. Term life insurance is a low-cost way to build an estate for a young family in the event that it's needed.

Disability insurance is also critical in your 30s or 40s, as it can help you maintain your lifestyle in the event of a disability that doesn’t allow you to work.

Other Wealth Planning Factors

You may have children nearing college age or younger children for which you are still trying to build a college fund. Certainly we all want to help our children cover as much of the cost of college as possible, but it's important not to neglect saving for your own retirement in order to finance college. There are many ways to fund college, but there are no do-overs for retirement savings.

This is also a time when you may be buying your first home or trading up to a second or third home. Home ownership can be a great investment, both financially and in terms of having a place to call your own. When purchasing a home, there is a balance between putting a sufficient amount down to keep your mortgage payment manageable while not tying up too much cash in an illiquid investment like a house.

Continually revisiting your retirement planning—such as mapping out retirement timelines and goals—can help you establish a savings target and create goals to track your progress against.

Wealth planning in your 30s and 40s is key to building a long-term, secure financial future. You’ll need to be cognizant of potential life and career changes that might be on the horizon, so it’s a great time to build a long-term relationship with a financial advisor who can be your partner through this process.

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