Retirement Savings: In Your 40s

Your 40s are a busy time.  There are quite a variety of expenses to consider. For many people, funds aren’t just for raising children.  For some, helping aging parents with financial assistance may also come into play.  And of course, there is also debt and mortgages.

It may seem like your accounts are being pulled in several different directions.  While that may be true, it is equally, if not more, important that you are moving money into a retirement savings account as well.

Believe it or not, around 1/3 of people ages 30-49 have no retirement account. If you fall into this group, then you have to start thinking even further ahead.

There is so much more to know about retirement, and these articles might help!


Most people hit their peak earnings during their 40s. Don’t get caught up in thinking that means it is time to buy that dream home. After all, what goes up, must come down.  If you’re presently struggling to live within your means, imagine how you’ll feel when you’re facing life without a steady paycheck.

What kind of costs can you expect at or after 40? The truth is that health care costs will continue rising as you age because you will likely need more care. There are two sure-fire ways to delay spending time in doctors’ offices and taking more medication – diet and exercise. I know, these are not fun.  But, numerous studies have shown time and time again that taking care of yourself helps ward off conditions that come with aging.

Mid-life is also when many think about purchasing or upping life insurance for themselves or family members. It can be a matter of dollars each month and is something to look into. None of us believe the unexpected will happen.  However, it is best to always be prepared, just in case it does.



If your retirement savings are minimal or do not yet exist, it is time to consider a lifestyle change.  Scratch that.  You need to strongly consider a lifestyle change.

Many families are joining what’s being called the tiny house movement. Downsizing is key, but moving into a 500 square foot home is not.  It is more about reducing your unnecessary expenses than anything else.  You may need to scale back on items such as cable or leisure expenses.  It is also crucial that you do what you can to pay off your debt.



Increase your retirement savings to cover any lost wages you will have later in life.  If you are not sure how much you will need for retirement, use a savings calculator.  Make sure the one you use includes factor such as your age, income, and estimated inflation.  In your 40s, you should be saving anywhere between 12 – 15% of each paycheck.

One way to do this is to sign up for your employer’s 401(k) plan.  If they have a matching contribution, make sure you contribute whatever amounts are needed to get the maximum contribution.  For instance, if they match you 25% on the first 4%, you fund to your account, put in 4%.  They will give you 1% on top of this.  That is instantly 5% towards retirement with little effort.

But, don’t stop there, make sure you max out the contributions you can make to all retirement accounts including both IRAs and your employer’s plan. It is not too late, but you are going to need to save even more.



As you get older, there will be more insurance needs. Make sure you have the right healthy, life and automobile insurance you will need should something happen.  One event and you could find yourself facing bankruptcy.

Take time to visit with your financial planner and insurance agents to make sure you have adequate coverage for these life events.  There would be nothing worse than your retirement savings being taken away because of one car accident.



You may feel like your retirement savings should be put on the back burner when you have immediate financial concerns at home. Many of today’s 40-year-olds are in what is called the ‘sandwich generation’.  They are in between caring for their children and their parents. While it can be daunting, the best approach to sensible retirement saving is a pragmatic one.

Hopefully, you or your spouse’s parents have put money aside for retirement. If they didn’t or lost funds due to an emergency, you will need to work together as a family to cut expenses and find ways to provide for their needs. Help get your parents’ paperwork in order, and you’ll have a clear picture of what to expect.

Your kids will likely need help with expenses before, during and after college. The best way you can help them out? Teach them some self-sustaining habits, such as cooking, necessary car maintenance, simple sewing or even gardening. Remember, they can always get a loan for their education, and you cannot do the same for retirement.

With all the choices you make and the busy activities of your 40s, use this momentum to move your retirement savings forward. Doing so makes the next 40 years something to look forward to, not fear.

how to start retirement savings in your 40s

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