What people can do in their 40s and 50s to reset their finances and plan well for retirement

Featured in the Australian Financial Review (AFR): https://www.afr.com/wealth/personal-finance/how-to-convert-your-peak-earning-years-into-a-wealthier-retirement-20251104-p5n7kl

1. What do clients in their 40s and 50s (is this the right grouping do you think?) come to see you about? 

Clients in their 40s and 50s are at a pivotal stage financially. This is  typically when people start to seriously consider their retirement plans, while juggling peak career responsibilities and family commitments.

The most common reasons clients in this age group seek advice include:

1. Retirement Planning and Superannuation

• Reviewing superannuation balances and strategies to maximise contributions.

• Understanding how much they’ll need for retirement and whether they’re on track.

• Exploring transition-to-retirement strategies and catch-up contributions.

2. Managing Debt and Cash Flow

• Paying down mortgages and other personal debts before retirement.

• Structuring debt efficiently, including considering investment loans or debt recycling if they still have a non tax-deductible mortgage (home loan against their principal place of residence).

• Cashflow advice for changing family needs, such as children leaving home or supporting ageing parents.

3. Investment Strategy

• Adjusting investment portfolios in preparation for retirement. If they still have a long timeframe they may take more risk, if they are less than 7 years away from retirement then we need to seriously consider the correct asset allocation in preparation for retirement in case there is a significant market correction happens close to their retirement age (we need to be ready before it happens, otherwise retirement plans may need to be postponed).

• Diversifying assets beyond property and cash, often into exchange traded funds, managed funds and/or shares.

• Reviewing asset allocation to ensure it matches their retirement timeline and risk tolerance.

4. Protecting Wealth

• Reviewing insurance cover (life, total & permanent disability, income protection, trauma) to ensure that to ensure their assets and family are protected in the event of premature death, serious illness or injury.

• Estate planning, including wills, powers of attorney, and beneficiary nominations, including considering weather a testamentary trust provision in the Will is appropriate (this can be beneficial for asset protection but can also be a tax effective strategy if assets are transferred to families with young children). Some clients also consider investment and education bonds for minimising tax and/or to address estate planning goals.

5. Navigating Career Transitions

• Managing redundancy packages, career changes, or business succession.

• Planning for part-time work or consulting as a bridge to retirement.

• Managing employee share schemes (ESS) and their tax implications as well as impact on overall financial and investment plan.

2. What (if anything) makes these decades different to others? That is, does it tend to be an inflection point? 

These decades are genuinely different and often an inflection point for several reasons, including:

1. Peak Earning Years

Most professionals reach their highest income levels in their 40s and 50s. This provides greater capacity to save, invest, and make strategic financial decisions that will shape retirement outcomes. They often start paying a lot more tax and are looking for ways to minimise tax in a way that aligns with their overall retirement goals.

They are usually also at a point in their lives where they have usually tried to organise their finances on their own and realise that it may better to outsource this to professionals. They usually are time poor and career driven and value being surrounded by a team of professionals to help them.

2. Retirement Comes Into Focus

Retirement stops being an abstract future concept and becomes a tangible goal.

• People start to seriously assess whether they’re on track, how much they’ll need, and what lifestyle they want.

• Superannuation strategies, catch-up contributions, and transition-to-retirement options become more relevant.

3. Opportunity to Correct Course

If earlier years involved missed opportunities or financial missteps, midlife is often the last practical window to reset, catch up, and optimise. There’s still time for compounding to work, but the urgency increases.

3. I know it's never too early to start planning for retirement but tell me about midlife and the challenges/opportunities. 

While it’s always wise to start planning early, these decades bring specific challenges and opportunities that make them a true inflection point for financial wellbeing.

1. Key Challenges

• Financial Complexity:
  You’re likely juggling mortgages, kids’ education, career transitions, and sometimes caring for ageing parents. Competing priorities can make it hard to focus on retirement.

• Lifestyle Creep:
  As income rises, so do expenses. It’s easy to let spending outpace savings, especially with family and social commitments.

• Retirement Uncertainty:
  Retirement starts to feel real, but many people aren’t sure if they’re on track. Questions about superannuation balances, investment strategies, and future lifestyle become more pressing.

2. Unique Opportunities

• Peak Earning Years:
  Most professionals reach their highest income in midlife. This is the best time to maximise super contributions, invest for growth, and pay down debt.

• Course Correction:
  If you’ve missed opportunities or made financial missteps earlier, there’s still time to reset, catch up, and optimise your strategy.

• Strategic Planning:
  You can take advantage of catch-up super contributions, transition-to-retirement strategies, and more sophisticated investment options.

• Lifestyle Design:
  With children becoming independent and careers stabilising, many clients start to think about the lifestyle they want in retirement: travel, hobbies, philanthropy and plan accordingly.

Midlife is the perfect time to take stock, reset your finances, and plan for the retirement you want. The decisions you make now, such as boosting super, managing debt, investing wisely, and protecting your wealth, will have a disproportionate impact on your future wellbeing.

4. If you had to devise a checklist, what would you recommend? Ie, check super, check insurance, what else? 

1. Review Your Superannuation

• Check your current balance, investment mix, and fees.

• Consider what concessional (pre-tax) and non-concessional (after-tax) contributions you should make.

• Consider catch-up concessional contributions.

• Consider consolidating multiple super accounts to reduce fees and simplify management.

• Review your fund’s performance and ensure it aligns with your retirement goals.

• Professional financial advice is critical.

2. Review Your Insurance Cover

• Review life, TPD (Total & Permanent Disability), income protection and trauma policies. It is critical to get professional advice on the right amounts of cover that align with your current situation and goals. 

• Update policies as circumstances change (e.g., children becoming independent, mortgage paid down, more debt, higher or lower income, etc).

3. Get Clear on Your Retirement Number

• Estimate your desired annual income in retirement.

• Use tools like the ASFA Retirement Standard or a personalised projection. These calculations can be quite complex, especially for higher income earners with various assets and/or entities. Professional advice would result in much more bespoke calculations and estimates based on individual circumstances.

4. Maximise Your Earning Potential

• Consider negotiating a raise, upskilling, or starting a side business.

• Use peak earning years to boost savings and investments.

5. Manage Debt Strategically

• Prioritise paying down non-deductible debt.

• Consider debt recycling strategies if you still have non-deductible debt.

• Review all loans and credit facilities for opportunities to reduce interest and fees.

• Consider accessing equity in your home and/or investment properties for other wealth creation strategies.

6. Invest for Growth and Diversification

• Review your asset allocation and adjust for your retirement timeline.

• Diversify investments to balance growth and risk.

• Don’t let cash sit idle unnecessarily, consider equities, property, exchange traded funds and/or managed funds.

7. Protect Your Wealth and Estate

• Ensure your will, powers of attorney, and beneficiary nominations are up to date.

• Consider estate planning and succession strategies.

• Plan for aged care.

8. Build and Maintain an Emergency Fund

• Aim for 6 months’ living expenses in a high-interest savings account or an offset account / redraw facility.

• Ensure any cash savings are earning a good interest rate or if you still have any other loans, consider placing these funds in an offset account.

9. Seek Professional Advice

• Engage a financial adviser for tailored strategies and regular reviews.

• Adjust your plan as circumstances change.

Your Vision Financial Solutions Pty Ltd ABN 64 650 296 478 and its Advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This article has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.