You’re in your 40s. You’ve built a career, bought a home in the Northern Virginia region, maybe had kids. You’re earning more than you ever have—but between commuting, managing family responsibilities, and juggling multiple (and often competing) financial goals, it’s easy to feel behind.
Here’s the good news: you’re not too late.
In fact, your 40s may be the most powerful decade for shaping your financial future. The moves you make now will define not just whether you retire but how well you live when you do.
Why Your 40s Are a Power Decade for Building Wealth
Many Northern VA professionals in their late 30s and early 40s wait to work with a financial advisor until the pressure builds. You might already be contributing to your TSP or 401(k), with some investments or savings starting to take shape. However, at this stage of life, the stakes feel different. You’ve started to accumulate real assets—and that changes the game.
This is the decade when everything begins to stack up: success, responsibility, and complexity. The strategy you build here matters more than any single investment decision. Every move in your 40s and 50s has the power to either expand your freedom or limit your options down the road.
Warren Buffett famously said, “Life is like a snowball. The important thing is finding wet snow and a really long hill.” With the right kind of snow (your savings and investments) and a long enough hill (time), momentum builds.
A startling (but hopefully encouraging) fact: at age 45, you’re as close to 72 as you are to 18. That means you still have four (maybe even five) meaningful compounding periods ahead.
But that isn’t the most important fact about 72. The Rule of 72 puts the power of compounding into perspective. Understanding this simple concept can change your financial life by teaching you to think like the wealthy. Here is how it works: divide 72 by your rate of return to estimate how long it takes your money to double. An 8% return doubles your money every nine years. Start with $250,000 at 45—and by 72, that could grow to approximately $2 million. No wonder Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
All this to say, it isn’t too late. You’ve still got the hill — now’s the time to take advantage of it.
Virginia Financial Planning: Run Your Net-Worth Reality Check
Understanding where you stand financially starts with knowing your net worth—the value of everything you own minus everything you owe. That includes your retirement and investment accounts, real estate equity, savings, and any other assets minus mortgages, credit cards, student loans, and other liabilities.
According to the most recent Federal Reserve Survey of Consumer Finances, Americans between the ages of 35 and 44 have a median net worth of $135,300 and an average net worth of $548,070. That’s a wide gap—and it tells you something important. A small number of high earners skews the average, while the median gives a more grounded picture of where most people actually find themselves.
Of course, those national figures don’t always reflect life in Northern Virginia. Between higher incomes, higher housing prices, and the prevalence of dual-income households, it’s possible to feel behind even when you’re objectively doing well. Whether your net worth is above or below those benchmarks, what matters most is that you stop guessing and start making decisions based on clear numbers.
First Things First: Risk Management and Estate Planning
Before we dive into investment strategies and tax optimization, there’s a fundamental truth every forty-something needs to hear: it doesn’t matter what your net worth is if you don’t have proper protection.
Risk Management Is Essential
At this stage, you’ve got more to lose. A major market drop can set you back years, but inadequate insurance can wipe you out entirely. Review your coverage—including term life insurance, disability insurance, and property and casualty policies. This step of financial planning is often overlooked by high earners. The fact is your insurance needs have likely evolved significantly since your thirties, and you ignore this at your peril.
Estate Planning Is More Than Just Documents
Recent statistics reveal a shocking truth: A whopping 73% of Americans aged 25-54 years old do not have a will, let alone a comprehensive estate plan. Having a will, power of attorney, and healthcare directives is a starting point, but real estate planning goes further. It’s about aligning your accounts and property with your overall plan—so that what you think will happen actually does.
One of the most overlooked (and emotionally loaded) aspects is guardianship. If you and your spouse were gone tomorrow, who would raise your kids? It’s not an easy conversation, but it’s an important one.
Beneficiary designations also deserve more attention than most people give in their 40s. Just because you named someone a decade ago doesn’t mean that designation still makes sense. Regular beneficiary audits can prevent your assets from accidentally bypassing your will or falling into the wrong hands.
When planning, keep in mind that Virginia has no state or inheritance tax. However, there is a probate tax on estates valued at over $15,000. Remember: having a will does not exclude you from probate—it provides instructions to the probate court. However, strategies like a revocable living trust, properly funded, can avoid probate. Proper planning can help minimize these costs and complications for your loved ones.
Don’t Let Outdated Beneficiaries Derail Your Estate Plan
Schedule a Beneficiary Review call today.
Consider Tax Planning Strategies
Once your risk management strategy is in place, it’s time to focus on building wealth with intention. You’re already saving—but the way you’re saving matters.
Start with your employer-sponsored retirement plan—whether that’s a 401(k) or the Thrift Savings Plan (TSP) for federal employees. While you won’t be eligible for catch-up contributions until age 50, maximizing your current contribution limits to at least get the match should be a priority.
Don’t overlook Health Savings Accounts if you’re eligible—they offer triple tax advantages and can serve as a powerful retirement savings vehicle. Additionally, for Virginia residents with children, the state’s 529 college savings plan provides a state tax deduction of up to $4,000 per account annually.
Traditional and Roth IRAs also deserve consideration, especially the backdoor Roth strategy for high earners who exceed income limits for direct Roth contributions.
Optimize Taxes Now and Later
While saving is the priority, creating a tax-diversified portfolio can make a significant difference once you reach your required minimum distribution age. This means building a mix of tax-free (Roth), tax-deferred (traditional 401k/IRA), and taxable investment accounts.
Many higher-earning young professionals in Virginia focus on minimizing taxes in the current year—but that short-term mindset can cost you more over your lifetime. Lifetime tax planning looks beyond this year’s return. It helps you intentionally structure your savings to reduce taxes over the long haul, not just today. This is where tax diversification becomes a powerful tool.
An effective tax planning strategy becomes particularly important when you consider that you’re almost as close to your RMD years as you are to your teenage years. Taking action now to build tax diversification gives your future self flexibility and options.
Design an Investment Strategy That Matches Your Reality
Investment allocation in your forties requires balancing growth potential with downside protection. Unlike your twenties, when you didn’t have much to lose, you now have something significant to protect while still needing growth to combat inflation.
For government professionals in Northern Virginia, a traditional 60/40 portfolio may not be the best fit. If your pension is expected to cover a meaningful portion of retirement income, your investment strategy should reflect that reality. With more stability built into your future cash flow, you may be able to take a different approach to risk—one that balances growth and protection without defaulting to outdated allocation rules. Every part of your portfolio should serve a purpose, not just follow a formula.
Avoid chasing past performance or trying to pick hot sectors and stocks. The more wealth you build, the longer it takes to recover from significant market downturns. On the other hand, the higher your income level you need to replace in retirement, the more impactful inflation becomes. Finding the right balance between risk and return is key.
The Path Forward: Making Your 40s Count
Financial planning in your forties isn’t about making up for lost time—it’s about optimizing the significant runway you still have ahead of you. The combination of higher earning power, growing assets, and multiple decades until retirement creates a potentially tremendous opportunity for wealth building.
You’re not behind. You’re in one of the most important decades of your financial life. The key is ensuring that all the pieces work together: proper risk management to protect your growing wealth, tax-efficient savings strategies to maximize your contributions, and an investment allocation that balances growth with protection.
For Northern Virginia professionals navigating federal benefits, variable compensation, and the region’s unique cost pressures, having a comprehensive strategy becomes even more critical. The complexity of your financial life has likely outgrown simple rules of thumb.
Ready for a Reality Check? Contact Good Life Financial Advisors of NOVA Today
If you’re wondering how your current strategy stacks up, consider scheduling a 15-minute Net-Worth Reality Check call. We’ll walk through your numbers (no paperwork required) and identify opportunities to build your customized financial planning strategy. Schedule your call today!
We’ll have a short conversation to see if we’re a good fit for each other.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
