Building and protecting (40-55)

Our 40s and 50s are important transition years when the focus shifts from raising a family to preparing for retirement.

By this stage of life, you should be well on your way to mortgage freedom. It may be tempting to access home equity as a source of low cost funds for spending or investing, but it’s a strategy you should approach with caution. You should ideally aim to enter retirement as debt-free as possible.
Salary sacrificing part of your wage/salary into super is a useful way to boost your retirement nest egg. Instead of receiving income in the hand, it is paid directly into your super fund, making this a potentially tax-friendly strategy. Do seek professional advice as strict limits apply to annual super contributions.
Throughout our middle age it is important to have adequate life insurance. Your level of cover may need to be adjusted once the kids become independent adults but ultimately you need enough cover to provide for family members who are financially dependent on you.
Once you become empty nesters, chances are you’ll have additional cash to invest. At this stage you may wish to shift from a focus on growth assets like shares and property to a more balanced approach. A managed fund can be helpful, providing access to a diverse range of assets including bonds and commercial property, which cannot easily be accessed by ordinary investors.
As you head into your 50s, it’s time to start thinking about retiring. Your financial adviser can provide a clear idea of how your nest egg is shaping up and whether you are on track for your preferred post-work lifestyle.