The Biggest Financial Mistake People Make in Their 40s and 50s – Guidance Financial Services

If there’s one age group where financial decisions really matter, it’s your 40s and 50s. You’ve been in the workforce long enough to know who you are professionally. You’ve accumulated assets, built a career, maybe raised a family. And yet, this is also the phase where many Australians quietly start to coast financially—often without even realising it. 

It’s the most common, most costly financial mistake people make in mid-life: assuming there’s plenty of time later to sort out retirement, investments, and long-term planning. 

The problem? Later arrives faster than you think. 

In financial planning, your 40s and 50s are the “make-or-break” years. Decisions made (or avoided) during this window can dramatically impact whether you retire comfortably, have to work longer than you’d like, or become reliant on the Age Pension. 

Let’s unpack what the mistake looks like, why it happens, and what you can do to avoid it. 

Why This Age Window Matters So Much

If your 20s and 30s are about building foundations, your 40s and 50s are about maximising potential. This is the period when: 

• You’re often earning more than at any other point in your life 

• Kids are starting to become financially independent 

• Mortgages are cleared or at least well under control 

Crucially you still have plenty of time for compounding to be hugely impactful on your retirement outcome, but the window is closing fast. Every year of delay has a disproportionate impact the closer you get to retirement. 

As an example, an extra $10,000 contributed into super at age 45 will add around $47,000 to your retirement balance at age 65. But the same contribution at 60? It barely makes a ripple – you retirement balance is improved by less than $15,000. 

This is why “I’ll deal with it later” can be such an expensive mindset. 

What “Coasting” Actually Looks Like 

Coasting rarely feels like coasting. Most people in their 40s and 50s are busy—careers, kids, sport, social life and perhaps ageing parents. You’re not lying around ignoring financial decisions. There are just other things that are more pressing. 

Here are the common patterns we see: 

1. Relying solely on the Super Guarantee 

The default 12% going into your super might feel like plenty, but for most Australians it’s not enough to fund a truly comfortable retirement. 

2. Letting lifestyle creep absorb all the gains 

Your income is up as your career peaks, kids school costs are winding up, and perhaps your home mortgage is cleared. The financial straight jacket is falling off – you actually have some spare money at the end of the fortnight. 

Yet this increase in free cash flow is quietly consumed by increases in discretionary spending rather than wealth-building. 

3. Only paying minimums on the mortgage 

No debt recycling, no strategic planning—just letting the mortgage run its course. 

4. Not investing outside super 

Super becomes the only long-term wealth vehicle, leaving you with limited flexibility before age 60. 

5. Delayed estate-planning decisions 

Wills, attorneys, binding nominations—they’re easy jobs to postpone. 

6. Keeping old insurance policies without review 

Needs change significantly between your 30s and 50s. Policies set up years ago may now be too expensive or unnecessary, or alternatively insufficient for your current situation. 

On their own, none of these are catastrophic. But collectively, they create a long-term pattern of financial drift. 

The Cost of Delaying Action 

One of the biggest challenges of financial planning is that consequences compound silently. You won’t feel the immediate pain of under-investing or not reviewing your strategies. But the impact shows up a decade later as: 

• Reduced retirement flexibility 

• Higher reliance on the Age Pension 

• Needing to downsize earlier than expected 

• Being forced to work longer than you’d like 

And because of how compounding works, every year you delay requires more money later to achieve the same result. It’s the exact opposite of how most people think. 

A Simple Mindset Shift

One of the most powerful changes people make around this age is reframing how they view this life stage. 

Instead of… 

“I’ll focus on investing once the kids leave home.” 
“We’ll ramp things up after the mortgage.” 

The more helpful framing is: 

“The next 10–15 years will set up the next 30–40 years.” 

This shift is subtle but transformative. It puts the spotlight back on long-term planning while you still have time on your side. 

What You Should Be Doing Instead 

Here’s where the upside is huge: small, strategic changes in your 40s and 50s can create enormous improvements in your financial trajectory. 

Some of the highest-impact actions include: 

Boosting concessional contributions 

Salary sacrifice or personal deductible contributions, particularly using the catch-up concessional cap, can dramatically accelerate your super balance and reduce tax. 

Targeted non-concessional contributions (where appropriate) 

Ideal for those approaching retirement who want to take advantage of caps, using things like the bring-forward rule. 

Investing outside super 

ETFs, managed funds, or even investment bonds provide flexibility and diversify where your retirement income comes from. 

Strategic debt management 

Debt recycling, offset strategy optimisation, or faster repayment can all improve long-term outcomes. 

Estate planning refresh 

A will that’s 10 years old probably doesn’t reflect your current situation. 

Insurance right-sizing 

This is often overlooked. Cover you needed at 35 may not be necessary at 50—or vice versa. 

Setting 5–10 year financial targets 

Rather than drifting, you’re deliberately working towards wealth milestones. 

The goal isn’t perfection. It’s intentionality. 

Example 

Consider “Mark and Linda”, both in their late 40s. Combined income of $240,000, a $650,000 mortgage, and about $350,000 each in super. They weren’t struggling—but they weren’t making meaningful financial progress either. 

They were contributing nothing extra to super. They had no investment portfolio outside super. Their mortgage was ticking along with minimum payments. 

Here’s what changed: 

• They began salary sacrificing $15,000 each into super 

• They refinanced their mortgage and redirected $12,000 per year into an investment ETF 

• They reviewed their insurance, dropping cover they no longer needed 

• They set a goal of having $1.1 million in super each by age 60 

These small changes didn’t affect their lifestyle dramatically. But the projected difference at retirement? 

More than $700,000 in improved net wealth. 

That’s the power of not coasting. 

Final Thoughts 

If you’ve found yourself in this coasting phase of life, don’t beat yourself up. You’ve probably had 20 odd years of nose to the grindstone, and it’s perfectly reasonable to want to ease up on the pressure. But recognise that your 40s and 50s are a golden window—high income, valuable experience, and enough time for compounding to still work in your favour.  

The biggest mistake is simply doing nothing—assuming the future will magically sort itself out. It won’t. 

But the good news? It’s absolutely not too late. With focus, structure, and a bit of intent, you can create a far stronger, more flexible financial future and achieve Financial Autonomy – that ability to have choice in life. 

Thanks for listening. If you need help with your planning, visit our website and book an initial meeting.