# 5 Money Moves to Make Before You Turn 40
Your 40th birthday marks a financial inflection point. The years leading up to it offer a last window to establish habits that compound over the next 25 years of earning potential.
Here are the five moves that matter most.
First, maximize retirement contributions. If you earn $65,000 annually, you can contribute $23,500 to a 401(k) in 2024. Those funds grow tax-deferred. At age 39, you still have 26 years until traditional retirement age. Every dollar invested now grows for more than two decades. High earners can use backdoor Roth conversions to add another $7,000 annually to a Roth IRA, which grows tax-free.
Second, eliminate consumer debt. Credit card balances at 20% interest rates destroy wealth faster than retirement accounts build it. Paying off a $15,000 credit card balance saves roughly $3,000 annually in interest charges alone.
Third, build a six-month emergency fund. Most Americans live paycheck to paycheck. A $25,000 emergency cushion prevents you from raiding retirement accounts or maxing credit cards when your car breaks down or hours get cut.
Fourth, increase insurance coverage. Term life insurance for 20 years costs $30 to $50 monthly at 39 if you're healthy. Waiting until 45 doubles or triples that cost. Disability insurance through your employer often costs nothing and replaces 60 percent of income if you can't work.
Fifth, review and adjust investment allocations. A 39-year-old with all money in bonds earns too little. One with all money in growth stocks faces unnecessary volatility near retirement. A common rule suggests holding your age in bonds. At 39, that means