Your 40s are all about maximizing your earnings, minimizing taxes, and setting yourself up for financial independence. Here are seven moves to make now.
This decade is all about maximizing your earnings, shielding assets from taxes and setting yourself up for a smooth glide into financial independence. Extra credit for also prioritizing your happiness and health along the way. Here are seven tips to help you strategize.
Max Out Retirement Accounts
Your 401(k) and IRA contributions should be at their peak. Take advantage of catch-up contributions (an extra $7,500 for those 50 and older in 2025), and if you’re self-employed, consider a Solo 401(k) or Cash Balance Plan to amplify tax-deferred growth and potentially save millions in taxes between now and retirement.
If you are just getting started with a new 401(k), at the bare minimum, contribute enough to get the full employer match. This is like free money from your employer, and even better, you won’t owe taxes on this income until you withdraw the funds from your retirement account.
Increase Your Tax-Free Income via Roth Strategies
Traditional tax wisdom says high earners should go pre-tax, but a Backdoor Roth IRA can help you sidestep income limits and build tax-free wealth. Roth conversions can also be useful in low-income years.
If you are already maxing out your employee contributions to your 401(k), $23,500 for 2025, check to see if your company allows for mega-backdoor Roth contributions. This fabulous tax-planning strategy can allow you to sock away an additional $46,500 each year into the Roth portion of your 401(k). If you contributed this much from age 40 to 45, you could have over $3 million that you could withdraw tax-free at age 70, assuming a 10% net return over this period.
Optimze Tax-Efficient Investments
There is plenty of money to be made investing between your 40s and the time you retire. That being said, today is always a good time to be strategic about your taxes on income and investment gains.
Municipal bonds, tax-managed funds and ETFs that minimize capital gains can help grow your wealth without giving Uncle Sam a huge tip. How much you trade, which shares you buy and sell and which type of investment vehicles you hold can either level up or level down the tax drag on your portfolio’s performance.
Charitable Giving with Tax Benefits
Donor-advised funds let you give generously while scoring tax deductions today. If philanthropy is a part of your legacy, this is a win-win strategy.
Prioritize Your Health
While money can’t buy you perfect health, it sure can help make it easier to make healthy choices along the way. Likewise, money helps you afford even the most expensive items on your bucket list; if you aren’t physically up to the adventures, how much fun will that be?
The steps you take today can help you improve your healthspan and enjoyment of your 50s and beyond.
Bulletproof Your Estate Plan
If early retirement is on the horizon, protecting assets from unnecessary taxes and ensuring a smooth wealth transfer is crucial. A revocable trust, gifting strategies and state-specific tax planning will keep things airtight. At the very least, check to see if your beneficiaries are up to date on your various accounts.
Design a Retirement Plan That Fits Your Lifestyle
Retirement isn’t just about money—it’s about freedom. Do you want to consult, travel, launch a passion project, volunteer or truly unplug? The more intentional your plan, the smoother your transition will be. Most people will combine several things to fill their days once work is an option.
Especially for those of you looking to retire early, what you want to be doing in your 60s may not be the same as when you are in your 80s. A retirement plan will allow you the financial freedom to pivot and continue enjoying life wherever your heart’s desire takes you.
Your 40s are a golden time to secure your financial future. By implementing these strategies, you can accelerate wealth-building, lower your tax bill and lock in the freedom to retire early on your own terms. Want to make these moves work for you? Start now—the best financial future is the one you craft today.
MRA Advisory Group will work with you to craft a plan that fits your lifestyle. Schedule a complimentary first meeting with one of our advisors today and let’s get to work!
Advisory Services are offered through MRA Advisory Group, a Registered Investment Adviser. It is general in nature that the statements herein are not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. The investments and strategies mentioned may not be suitable for all investors. Past performance is no guarantee of future results. Nothing herein, nor any attachment, shall be considered to constitute (i) an offer to sell, nor a solicitation of an offer to purchase, any security, or (ii) tax or legal advice.