Turning 45 is not good news. It feels a lot worse than 40 for some reason. I guess it’s because midlife probably passed by sometime between those two birthdays. The life expectancy for men in the US is actually just 74.5. (This is down from 76.9 in 2018!) I figure I’ll live a little longer than average because I’m not obese, don’t take drugs/smoke, exercise regularly, and live a relatively healthy lifestyle. But that’ll buy me just a few years. I really don’t think I’ll make it to 90. Usually, the men in my family don’t live that long. They live an unhealthy lifestyle and check out relatively early for the most part. I guess we’ll see if I can outperform my grandfathers and uncles. My dad is doing pretty well. He’s 76 and he’s relatively healthy.
Anyway, I made this list of goals to accomplish by 45. Most of them are basics, but there are a few challenging goals, too. This type of post is always fun for everyone. You can see how you’re doing and it gives you something to shoot for. Check it out and let me know what you think.
Oh, keep count as you go. You get a point for every one of these goals you’ve accomplished. I’ll give you a score at the end of the post.
*Originally written in 2018. Updated 2022. I’ll be 49 soon. Time really flies so be happy and enjoy life while you can.
1. No Consumer Debt
Debt is bad. When you have debt, it’s difficult to save and invest. Unfortunately, most of us have a debt of some kind. At 45, you should have control of your money. The student loans should be paid off and you shouldn’t have any other consumer debt.
Here is my list of what I consider bad debt.
- Payday loans
- Credit card debts (If you don’t pay off the balance every month.)
- Store credit debts
- Auto loans
- Medical debts
- Student loan debts
- Personal loans
If you have any of these, you need to get rid of them as soon as possible.
Bonus point: A home mortgage is a consumer loan, but it’s a good tool to build wealth. This is especially true if you locked in a low-interest rate before inflation hit. We all need a place to live and I think being a homeowner is better than renting. You get a bonus point if your mortgage is paid off, though. That’s a great accomplishment. Nice job!
2. Retirement Planning
45 is not young anymore. At this age, you’re probably more than halfway through your working life. You should have a retirement plan by now. There is still time to save for retirement, but the earlier you start investing, the better off you’ll be. It’s really bad to put off retirement savings beyond this point. Working until you die isn’t a plan because you may not be able to work later. Our health deteriorates and our skills need constant adjustment as we age. Employers generally prefer younger and cheaper employees these days.
Here is my retirement plan for example.
- Age 38: I retired from my engineering career to become a SAHD/blogger.
- Age 55: Junior goes off to college. I’ll retire from being a SAHD and cut way back on blogging. Mrs. RB40 and I will walk the earth for a few years.
- Age 70: We’ll settle down somewhere and enjoy a slower pace of life. This is full retirement.
You can see more detail in this post – Our Unusual Early Retirement Withdrawal Strategy.
To retire early like this, you need to save and invest very early in life. I started investing when I began my engineering career in 1996 and I’m still contributing to my retirement savings today. It’s incredible what happens when you max out your 401k contributions every year.
Bonus point: You get a bonus point if you’re maxing out your 401k and Roth IRA contributions every year. That’s $26,500 in 2022. If your employer doesn’t have a retirement plan, then we’ll count whatever you invest. So you still get a bonus point if you invest more than $26,500 in 2022.
3. Net Worth 10x
We’re working backward on this one. According to the 4% Safe Withdrawal Rate, You need at least 25x your annual expense to retire comfortably. Basically, you can withdraw 4% of your investable asset and it should last 30+ years. 25x is just the minimum, though. If you want to retire in your 30s or 40s, then you will need some padding.
For our purposes, we’ll just stick with 25x as the baseline. At 45, you should have 10x your annual cost of living right now. This is because it usually takes 6-8 years to double your investment. In 10 to 15 years, you can grow 10x annual expense to 25x. Then, you can retire comfortably without worrying much about finance.
Figuring out this net worth multiple can take some work. You need to track your expense and see how much you spend every year. If you don’t already do this, then you should start right away. Tracking your spending is a great way to become more serious about your finances. You need to know where your money went. This is an essential step to figuring out if you can retire comfortably.
Next, you need to figure out your net worth. This is everything you have that can be converted into money. I include our primary residence in our net worth, but it only makes up about 5% so it’s not a big deal. You can read more about our net worth here if you’re interested – RB40 Household Net Worth Breakdown.
Bonus point: Give yourself a bonus point if your net worth is more than 20x your annual expense. This means you’re very close to financial independence. You’re almost there!
4. Maintain Your Health
This one is tricky in midlife. Some of us have it together and are living a healthy lifestyle. However, most of us have let ourselves go since college. I gained 14 pounds since then and I’m a lot less active. This is not good. If I continue living this way, I’ll become overweight soon.
Fortunately, my lifestyle improved a bit since I quit my engineering career. I’m more active and I have less stress in my life. However, the weak point is my diet. It doesn’t take many extra calories to gain a pound annually. Overeating is a big problem for many of us. I need to eat healthier to stay healthy as I age beyond 45.
If you’re looking to lose weight and become leaner, check out Martin’s Intermittent fasting Course. He’ll get you started with fasting and simplifying your exercise program. It’s working really well for me. Hopefully, I can stick with intermittent fasting for the long haul.
*2022 Update – Wow, I’m still doing intermittent fasting after 4 years. I got used to not having breakfast. Well, I eat breakfast on the weekend when everyone is home, but that’s all right. My weight is pretty stable at 135 pounds. That’s about right for my height and body type.
Here is a shortlist of what you need to do to stay healthy as you age.
- Maintain your weight. This means no gaining weight as you age.
- Minimize junk food, soda, sugar, and processed food.
- Eat a lot of fruits and vegetables. That’s at least 5 servings/day… Sheesh!
- Don’t smoke.
- Always put on your seat belt and drive safe.
- Be physically active regularly. Shoot for at least 30 minutes/day.
- Visit your doctor at least once per year.
- Build a strong social network. It is very important to have good friends and acquaintances.
- Minimize stress.
- Don’t get Covid. The life expectancy in the US decreased by more than 2 years since the pandemic started.
It’s not easy to do all of these things above. Life in the US is very busy and most of us don’t have time to maintain a healthy lifestyle. This is extremely important when you get older, though. Wealth without health is NOT good enough. You need both to enjoy life to the fullest. IMO, health is a ton more important than money. Plenty of poor people has a happy life.
5. Stable Family Life
At this point, you should have a stable family life. I’m a bit biased here because we’ve been married for almost 20 years. It’s a lot easier to achieve goals when you have a supportive partner. Marrying Mrs. RB40 was the best move I made when I was young. We are a great team. I wouldn’t have been able to retire early if she wasn’t on board with the idea.
Kids… What can I say? Some people love them, some people don’t. IMO, you should be done with kids by the time you’re 45. What I mean is you shouldn’t have more kids at this point. They are disruptive. Who wants to chase babies around when you’re in your late 40s? Little kids are exhausting.
Anyway, you get a point if you have a stable family life. This means there are no dramatic changes on the horizon. If you’re single with no kid and plan to stay that way, then you get a point, too. In fact, it’s probably easier to retire early if you’re single. Changes are disruptive and can easily screw up your finance. Let’s stay the course at this point.
6. Know Your Parents’ Plan
At 45, you’ll most likely be part of the sandwich generation. Your parents are older and they may or may not need help. Now is the time to talk to them about their future. Can they retire and live independently? Each case is different so you really need to talk to them.
- My mom: A lot of things changed in 4 years. In 2018, my mom was just diagnosed with dementia and she was living with us. Long-term care is very expensive in the US so we decided she should move back to Thailand. My dad took care of her since then. Recently, She lost her ability to walk so she is moving to a nursing home very soon. Unfortunately, she doesn’t have any retirement savings. My brothers and I will pay for the cost of her care. It’s pretty affordable in Thailand. A local nursing home charges about $1,000/month.
- My dad: My dad is in good health, but he is getting older too. He’ll move into the nursing home to keep an eye on my mom. They are getting a private room and he will stay in the same room. He has some income from his rentals. He told me he’ll take care of himself and doesn’t want anything from us. We’ll see how it goes.
- My FIL: Mrs. RB40’s dad lives in California by himself. He’s doing okay for now, but he may need more help in the future. His retirement savings are in good shape so we don’t have to worry about his finance.
- My MIL: Mrs. RB40’s mom lives in California by herself. She is active in the community and she is in good shape. I’m not too worried about her. She seems very healthy.
You get a point if you know your parents’ finance and retirement plans. Hopefully, your parents saved for retirement so you don’t have to contribute too much.
7. Have A Will
About 55% of Americans do not have a will or other estate plan in place. This statistic isn’t encouraging. I guess most people don’t have many assets to pass down so they don’t think they need to plan. A will is necessary if you have dependents, though. You need to spell out exactly what you want or else the state will decide for you.
We made an official Will and a Living Trust in 2021!
Bonus point: You get a bonus point if you have a living trust. It’s a good idea if your estate is sizeable.
- 0-2: Not good. You’re 45. It’s time to grow up and think about the future.
- 3-5: Not bad, but there is room for improvement.
- 6-7: Congratulations! You’re a respectable adult.
- 8+: Awesome! You’re ready for the big 5-0. 😉
How did you do? My score was 7 when I was 45. That’s pretty good, but I’m sure lots of you did better. Hopefully, I’ll check off a few more over the next few years. My biggest priority today is to live a healthier lifestyle. Wealth is good, but health is paramount.
What about you? Are you happy with yourself at 45?
*Sign up for a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors. They have a really good retirement calculator.
Photo by Jeremy Lapak
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Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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