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Forty and Fabulous?

|Includes: AAPL, Genworth Financial, Inc. (GNW), GOOG

If you’re not one of the 78 million Baby Boomers, but instead one of the Gen-xers right behind them, there hasn’t been much information for you to plan for your financial future. The Boomers get all of the press and attention but now that you’ve reached your forties, what now for you and yours?

If life truly begins at age 40, what are the most important things you can do now? At age 40 you still have 25-30 years ahead to save and invest. The next 20 years in America will not likely be as productive as the past 20 years (although the last 10 years sucked!). But now life is no longer a “dress rehearsal.” This is for real – real life. And you should have no doubt that taxes and inflation will likely rise during the next 20 years, and that’s a bonus for you, if you know how to harness its powers.

First things first – before you know where you’re going, you need to know where you are, so take the time to write down a list of all your assets and valuables, and then your debt and expenses. This will be your guide each year to determine if you’re on track for a successful plan or demise. It sounds simple and it’s oh so powerful too! Next, try to pay cash for most everything you buy. Yes, it’s nice getting those airline miles but credit is a double edged sword and it pays to be safe than sorry. And even though almost everyone swears they’re paying off their credit card balances each month, the average household in America pays $2,000 per year in interest over and above their mortgage and car loans!

With the dismal outlook for the stock market and growth in the economy, it will be very important to look at alternative ways to save and invest. Since we as a nation are likely to have a repeat of the late 1960’s and 1970’s, let’s think about which investments worked out really well back then: tax-free retirement was a certain type of life insurance policy that would build cash value without the chance for loss. These are now called index universal life policies, but don’t let the labels scare you away. In a volatile economy, the worst thing you could do is lose money! Will Rogers said it best when he stated, “I am more concerned with the return OF my money than the return ON my money.” And for the near future, that should be your mantra too.

If you or your spouse die before either retires, life insurance will be your family’s life raft. If not, the cash values built up in the policies can be withdrawn and most times done so income tax free! Thus, providing you with a healthy and secure monthly check. This will be huge in the future considering the amount of our current debt load ($14.5 Trillion and growing) and the deficit’s city, state and federal governments are running.

While 401k’s and IRA’s became great investments since their huge acceptance in the very early 1980’s, they can easily lose value. Thus, an insured path to retirement with an institution standing in the breach between your money and market losses is paramount! And SHOP around. Talk to several insurance agents and even investment advisors. The Wall Street firms are getting into offering life insurance policies BIG TIME now. It’s super simple to get a quote and compare value and benefits for your hard earned dollar. And then of course, plan with these type of investments to grow large enough to pay off your home mortgage when you retire; it’s all about cash flow.

In some situations, your 401(k)’s and IRA’s could be the worst place to save money. Because IF we do have large income tax increases in the future, these retirement plans only delay the taxes – not eliminate them. If rates are rising, why would you want to wait to pay more or higher taxes?

Lastly, social security will likely be radically changed by the time you “40-somethings” begin withdrawing your benefit (if any?). So plan on having more than just social security available for you to rely upon when you decide to retire. There are lots of solid dividend paying stocks that have proven track records for long term prosperous growth (but these are rarely if ever insured), and the ever popular annuity or personal pension plans are flying off the proverbial shelf. Ask around and you’ll understand why too.

Life is good now and can be even better each and every decade of your life, just plan ahead.