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In Your 40s

If you have children, you absolutely must...be smart about college costs.

Yes, your kids should go to school. No, you shouldn't bankroll their degree whatever the cost. You've spent your life creating a sound financial plan; don't upend it by suspending your retirement savings or taking out a home equity line of credit to pay for a pricey college. Instead, consider a financial safety school that's likely to offer your family a generous scholarship package. If you opt for a more expensive school, have your kids borrow fixed-rate federal loans, which you can supplement with federal PLUS loans; take out only as much as you can afford to pay off before you stop working.

If you don't have children and plan to retire in your current home, you absolutely must...get ahead on your mortgage.

Try to make additional monthly payments now to shorten the life of your loan. Pay off your mortgage before retirement, and that's one less bill you'll have to worry about when you're on a fixed income.

Under no circumstances should you...take on more debt by tapping a home equity line of credit or borrowing on credit for unnecessary luxuries.

In Your 50s

You absolutely must...explore long-term-care insurance.

Unless you are already in poor health or have a family history of medical issues, chances are you will live a very long time. In fact, the average life expectancy for a 55-year-old woman today is 83. And what you may need at that age is a long-term-care (LTC) insurance policy, which covers ongoing medical costs such as physical therapy, extended nursing home stays, and home healthcare visits. Why worry about LTC now? If you wait until you're older, you might discover that the annual premium cost is too high or that you've developed a preexisting condition, making you ineligible for coverage. (See "Taking the Long-Term-Care View" to figure out what policy makes sense for you.)

Under no circumstances should you...assume you can afford to retire early.

Stop working at 60 or so and your savings, Social Security, and pension might have to sustain you for 25 to 30 years.

In Your 60s

You absolutely must...scope out your Social Security options.

You can claim retirement benefits as soon as you turn 62, but if you take a payout then, you will receive 25 to 30 percent less than what you are entitled to at full retirement age. (That's somewhere between 66 and 67, depending on the year you were born.) Manage to wait until age 70, though, and you'll collect a check that's at least 75 percent bigger than the one you would have earned at 62. Higher payouts—which, by the way, are adjusted for inflation once you start to receive benefits—can really boost your income later in life, when you need it most.

Under no circumstances should you...rely on a reverse mortgage to solve your cash-flow problems.

You are still liable for property taxes and maintenance of your home. If you can't afford those costs, don't be afraid to downsize.

Next: What you need to know about long-term care insurance

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