Here’s part three of “Managing Money by Age” series.

AGE 40

Your net worth in your 40s should be expanding as well, but so, perhaps, are your debts. You’re probably earning more than ever before, but the money may not seem to go far because you’re grappling with such big expenses: homeownership, your children and their educations, your own retirement (which no longer seems like an impossibly distant event).

You have less time to recover from missteps, so it’s important to get your money right. Here’s the snapshot of the typical 40-something’s finances:

• Incomes and wealth are up. The median income for 40-something households, nearly $58,000, is about 20% higher than for 30-something households, according to the Federal Reserve’s latest Survey of Consumer Finances. Net worth is dramatically higher for the older group: a median of $117,800 versus $44,200 for 30-somethings. Nearly three-quarters of 40-something households own their own homes, compared with 60% of those in their 30s.
• Credit card balances are ticking up. A majority of people in their 40s carry credit card debt, and the median balance is $2,900, sharply higher than the $2,000 carried by households in their 30s. The percentage carrying big balances is up as well: One in 10 people in their 40s have more than $10,000 in credit card debt, compared with one in 12 people in their 30s.
• Yet fewer are falling behind. Higher incomes and more experience managing money may explain why less than 8% of 40-somethings are 60 days or more late on a bill, compared with nearly 12% of those in their 30s. Negative net worth is more of an anomaly as well, with just 7.5% of people in their 40s owing more than they own, compared with 11.1% of those in their 30s.
• More people are getting serious about retirement. The percentage of people who have workplace retirement plans or IRAs rises to 59% for those in their 40s, compared with 53% of 30-somethings. Account balances are higher as well: a median of $40,000 versus $17,000.

What to do now

Clearly, those retirement-plan balances are still a long way from comfortable nest eggs, which is why it’s so important to take these steps:

• Make retirement savings your priority. With all the other claims on your paycheck, it can be tempting to skimp here. But every dollar you fail to put aside now could mean $10 less in retirement income. Use our financial GPS software to figure out how much you need to save and make the sacrifices necessary to put aside that money. At the very least, make sure you’re taking full advantage of any company match in a workplace 401(k) or 403(b) plan.
• Pay off those credit cards. Swelling credit card balances — or really, credit card balances of any amount — are a sign of trouble. Our budgeting articles and debt management articles can help you get on track. If your balances are so big you can’t pay them off within a few years, consider talking to a legitimate credit counselor (one affiliated with the National Foundation for Credit Counseling) and with a bankruptcy attorney about your options.
• Smart college strategies. Parents want to give their kids a good start in life, but don’t gut your own future while you’re trying to ensure theirs. Be wary of taking on more debt than you can easily repay, and consider lower-cost alternatives if paying or saving for college means stinting your own retirement savings. Read saving money on education and managing money for college students.

Source: MSN.com

AGE 50

Here are some Smart Tips for managing your money in your 50s:
• Make sure you’re on track for retirement. You’ll need to start estimating how much money you’ll need when you stop working. If you have fallen behind on your 401K the IRS allows workers at 50 to start making annual catch-up contributions.
• Pay off your debt. Start with non-deductible debt like loans. Then if you can, start tackling your mortgage. The more debt you get rid of in your 50s. The more time you have to save money for retirement.

• Get disability insurance. According to the Social Security Administration nearly one-third of workers in the workforce become disabled before retiring.
• Look into long term care insurance. This is the ideal time to purchase it. Consider that a healthy 55-year-old male would pay $3,500 a year for a policy that offers $200 in care a day. Wait until you are 65 and the premium jumps to $9,400 a year.

Source: www.kitv.com