In Your 40s? 5 Financial Fixes to Make Before It's Too Late
A UK guide for your 40s. Learn the 5 essential financial fixes to make now, from supercharging your pension to protecting your family, before it's too late.
Your 40s are a decade of financial crossroads. For many, it's a period of peak earning power, but it's also a time of significant financial strain – mortgages, growing children, and the first serious thoughts of an approaching retirement. The financial decisions you make in this decade have a disproportionately large impact on the quality of the rest of your life. Get it right, and you set yourself up for freedom; delay, and the hill to climb becomes significantly steeper.
This isn't about causing panic. It's a call to action. At Plouta, our mission is to empower you with the clarity and confidence to take control of your financial destiny. This guide will walk you through the five most critical financial fixes you should make in your 40s to secure your future and ensure it's not too late to build the life you want.
What You Will Learn in This Guide ⤵
The Pension Wake-Up Call: Why this is the decade to get serious about your retirement savings.
Tackling "Good" Debt: The crucial step of clearing your mortgage faster.
Building Your Family's Armour: Assessing your insurance and protection needs.
Planning for Major Life Goals: Looking ahead to big expenses like university fees.
Optimising Your Investments: Making sure your money is working as hard as you are.
Fix #1: Supercharge Your Pension
If you do only one thing in your 40s, make it this. You are now roughly halfway through your working life, and the power of compounding interest, while still strong, is beginning to wane. This is the decade to get aggressive with your retirement savings.
The Reality Check: By your 40s, you should ideally have a pension pot worth around three times your annual salary. For many, there's a significant gap. The decisions you make now will determine whether that gap closes or widens.
Your Action Plan:
✔️ Find All Your Old Pensions: You've likely had several jobs by now. Use the government's free Pension Tracing Service and contact old employers to track down every last pot.
✔️Consider Consolidation: Bringing your old pensions together into a single, modern SIPP (Self-Invested Personal Pension) can make them easier to manage, potentially lower your fees, and give you a clearer picture of where you stand.
✔️Increase Your Contributions: This is crucial. Every time you get a pay rise, commit to increasing your pension contribution before you get used to the extra take-home pay. Aim to contribute at least 15% of your pre-tax salary (including your employer's contribution) if you can.
✔️ Maximise Employer Contributions: Ensure you are contributing enough to get the maximum possible matched contribution from your employer. Not doing so is turning down a pay rise.
✔️ Use "Carry Forward": If you are a higher earner or have received a bonus, you may be able to use any unused Annual Allowance from the previous three tax years to make a large, tax-efficient contribution.
Fix #2: Get Serious About Clearing Your Mortgage
While your pension is growing, your mortgage is the "anti-investment" – a debt that costs you thousands in interest every year. Your 40s are the perfect time to accelerate your repayments.
The Goal: Aim to be mortgage-free by the time you retire. Entering retirement with mortgage payments is a significant drain on your pension income.
The Psychological Win: The feeling of security that comes from owning your home outright is immense. It dramatically reduces your essential "Needs" in retirement, giving you far more freedom.
Your Action Plan:
Make Regular Overpayments: Even £100-£200 extra per month can shave years off your mortgage term and save you tens of thousands of pounds in interest. Use an overpayment calculator to see the impact.
Use Windfalls Wisely: Apply a portion of any bonus, inheritance, or other windfall directly to your mortgage capital.
Remortgage Smartly: When your fixed deal ends, don't just slip onto the high Standard Variable Rate (SVR). Remortgage to a new competitive deal, and consider reducing the term if you can afford the higher payments (e.g., from 20 years remaining to 18).
Fix #3: Build Your Family's Financial Armour
By your 40s, the financial consequences of an unexpected death or serious illness are at their peak. You have a mortgage, potentially dependent children, and a lifestyle that relies on your income. Your financial plan is incomplete without a robust insurance safety net.
The Reality Check: Recent statistics show that only 14% of UK adults have income protection, and a third of women have no life insurance. This is a huge protection gap.
Your Action Plan - The "Big Three":
Life Insurance: Do you have enough cover to pay off your mortgage and provide for your family's living costs if you were no longer around? Review your policy to ensure it's still adequate.
Income Protection: This is arguably the most important policy. It pays you a regular, tax-free income if you are unable to work due to any illness or injury. It protects your ability to pay your bills and continue saving for retirement during a long-term absence from work.
Critical Illness Cover: Provides a tax-free lump sum if you are diagnosed with a specific serious illness. This money gives you financial breathing room to pay for treatment, adapt your home, or simply reduce financial stress during recovery.
Fix #4: Plan for Major Future Expenses
Your 40s are often when major future costs, like university fees for your children, come into sharp focus.
The Reality Check: The cost of sending a child to university in the UK, including tuition fees and living costs, can easily exceed £60,000. While student loans are available for fees, many parents wish to help with living costs to reduce the debt their children start their working lives with.
Your Action Plan:
Start a Junior ISA (JISA): This is a tax-free investment account for your child. You can contribute up to £9,000 per year (2025/26 allowance). Starting a regular contribution, even a small one, into a Stocks & Shares JISA can build a significant pot over the 10-18 years before they need it.
Have the Conversation: Talk to your children about the financial realities of university and what level of support you might be able to provide.
Fix #5: Get Serious About Your Investment Strategy
If you've been cautiously saving in cash, your 40s are the time to ensure your long-term money is working harder for you.
The Reality Check: With a retirement horizon of 20+ years, leaving your long-term savings in cash means inflation is likely eroding its purchasing power every single year.
Your Action Plan:
Use Your Stocks & Shares ISA: This is the primary vehicle for building a flexible, tax-free investment pot that you can access before your pension. Ensure you are using your £20,000 annual allowance.
Review Your Pension's Investment Fund: Log in to your workplace pension portal. Are you in the default fund? Does its risk level still suit you? Most providers offer a range of funds, from cautious to adventurous. With 20+ years to go, ensuring you are in a fund with a high allocation to global equities is crucial for achieving long-term growth.
Don't Panic in a Downturn: In your 40s, you will experience several market cycles. The key to successful investing is to stay the course and not panic-sell when markets fall.
Know Where You Stand: Take the Plouta Financial Wellness Survey
Taking our Financial Wellness Survey is a great first step. It will help you reflect on your habits and identify the key areas to focus on in your journey towards financial freedom.
Conclusion: Your Decade of Action
Your 40s are a decade of immense opportunity. By taking decisive action now, you can fundamentally change the trajectory of your financial life. Supercharging your pension, attacking your mortgage, building your insurance safety net, and investing with a clear plan are not just items on a to-do list; they are the essential fixes that build a future of security, freedom, and choice. Don't let this critical decade slip by.
Get one-to-one financial advice
We’ll find a financial adviser perfectly matched to your needs. Getting started is easy, fast and free.
Disclaimer: This guide provides general information and is for informational and educational purposes only. It does not constitute financial advice. The value of investments can go down as well as up, and you may get back less than you invested. Tax and pension laws are complex and subject to change. Always seek professional, regulated financial advice tailored to your specific circumstances before making any significant financial decisions