Investing For The Ages Part II of III: 40’s and 50’s

In the second part of this series, “Investing for the Ages,” I want to focus on people in their forties and fifties. At this point, you should have accumulated forty percent to sixty-five percent of your retirement savings goal. Ok, I’m guessing a lot of people are thinking, “I have no idea what my retirement goal is, much less how much I should have accumulated so far.” You should do a detailed analysis or work with a financial advisor to help you, but let’s do a very rough guestimate. Assume that after taxes and savings/investing, you are spending $5,000 per month on lifestyle, and you plan to retire at sixty-five. If you’re in your early-to-mid forties, you should have $400,000 – $500,000 in retirement savings. If you are in your mid-to-late fifties, your retirement savings should be around $600,000 – $700,000.   If you are significantly below the targets, consider hiring a professional advisor to help you map out a plan. You still have time, but time is running out.

If you followed our advice for Investing for the Ages: ’20s & 30’s, you’ve been investing primarily in all stocks. Now’s the time to consider adding some bonds to your portfolio. As a starting point, allocate 6% to bonds (consider a bond ETF such as AGG) and annually increase your bond allocation by one percent so that by the time you’re age sixty, your bond allocation should be around 20%. Continue to invest the balance in a diversified portfolio of stocks or stock mutual funds/ETFs.

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Investing for the Ages Part II of III: 40’s & 50’s

  • Quick Checkup: Are you on track? Based on $5k/mo monthly expenses
    • Early-mid forties: $400k – $500k
    • Mid-late fifties: $600k – $700k
  • Introduce bonds: 6% at age 40; add 1% each year
  • Consider AGG (ETF) for your bond allocation
  • Get help from a Certified Financial Planner



Stewart H. Welch, III, CFP, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including  J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaireand 100 Tips for Creating a Champagne Retirement on a Shoestring Budget.


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