You can do a quick Google search and find countless articles from news outlets that tell you how you should be invested if you’re in your 40s.  If you fall into that segment of the population, should you follow their advice?

By the numbers

First, let’s look at how many people fall into this category.  According to the U.S. Census Bureau estimates for 2017, 12% of the U.S. population of approximately 325,719,178 people are between the ages of 40 and 49. 

Now, let’s think about the other numbers from the population.  The median household income for the entire U.S. population was $60,336.  But note how wide the difference is between the median household income of the first two states on the list (listed alphabetically) – median household income in Alabama was $47,157 and in Alaska it was $77,903.  For people in their 40s nationwide, approximately 67 percent owned their home and approximately 31 percent rented their home.

Here are some other interesting facts – looking the highest degree of education attained, of the population aged 40 to 49, approximately 20% had a high school diploma and another 4% had a GED or equivalent.  Approximately 9% had attained an Associate’s degree, about 21% had attained a Bachelor’s degree, and approximately 13.7% had attained a Master’s degree, Professional degree beyond a Bachelor’s degree or a Doctoral degree.

And we haven’t even touched on how many people in their 40s got married, divorced or were widowed in the last year.  Or how many are paying student loans or medical bills.  Or how many just adopted or recently gave birth.  Or how many are taking care of parents or in-laws or other family members.

We didn’t talk about which of those folks have children going to college next year or the folks who have 8 more years to save for college.  Which of those folks are business owners, self-employed or work for large corporations with incredible benefits packages.

Who is this really about?

So – how do you know who the author of the article is speaking to?  Is it you?

What is motivating the author?  What reason does the author have to put this article in print or on the internet.  Is the purpose to specifically benefit you?  Or is the purpose possibly to get as many people in their 40s to click the link?  Consider the source of the information.  Is someone being paid to provide you useful guidance about your specific set of circumstances including your age, family, goals, income, expenses, taxes, etc.  Or are they possibly being paid to funnel people like you based on your age, gender or interests to companies who would love to sell you their products?

With the possible exception of the necessity of having an emergency fund, I cannot think of a piece of financial advice that uniformly applies to everyone in any particular group.  You could do some serious damage to your financial standing by following advice that is not appropriate for your financial situation.  For instance, based on many of these articles, you would make no changes to the allocations in your investment portfolio for 10 years, simply because you would still be in your 40s.

Make it about you

Determine a financial strategy specifically aligned with your goals that starts with evaluating where you are now – taking account of all aspects of your financial life rather than accounting solely for your age.  And update that plan as your situation changes – as you age, as your goals evolve, as the economy changes, and as things don’t go entirely according to the plan. 

That isn’t to say that these articles are all bad.  These articles can be useful to get ideas.  You should evaluate these ideas with respect to your own financial situation.  Do some research or ask questions about how strategies included in these articles might affect your financial plan.  I suggest that you ask questions about these strategies even if you know they don’t apply to you.  Those questions could lead to interesting discussions which could lead to new ideas that do apply to your financial plan.