If you are in your 40s and wondering how much money you should have saved so far, you are not alone. Many people in this age group are balancing family responsibilities, paying off mortgages or student loans, managing debt and starting to think seriously about retirement.
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Your 40s are often called the wealth-building window because earnings tend to peak and compound interest can make a big difference. With retirement still 20 to 25 years away, now is the time to maximize your savings and set yourself up for financial security.
Jessica Jones, vice president and senior financial advisor at BOK Financial, offered clear advice on how those in their 40s can assess their retirement readiness and take practical steps forward.
An Expert’s Perspective
While the amount you should have saved depends on your income, lifestyle and personal goals, many financial planners use a multiple of your annual salary as a simple benchmark. According to Jones, a common target by your late 40s is to have saved from three and a half to six times your annual salary. For example, if you earn $70,000 a year, your retirement savings should ideally be between $245,000 and $420,000 by this point.
If your savings are not close to these figures, do not worry. Jones emphasized that it is never too late to improve your financial situation, but it is important to start acting now.
“One practical step is to contribute consistently,” Jones explained. “Setting aside $350 to $500 a month can help you begin to catch up on retirement savings.” She also highlighted the importance of taking full advantage of your employer’s 401(k) match. “Many people miss out on free money simply because they do not understand how vesting works or fail to contribute enough to qualify.”
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Review your 401(k) or IRA contributions regularly and increase them when possible. If you are self-employed or do not have access to an employer-sponsored plan, consider opening a SEP IRA or Solo 401(k). These options allow you to save more on a tax-advantaged basis.
Jones suggested making gradual increases in your contributions. “You might redirect a work bonus into savings, increase your contributions by one percent each year or reduce discretionary spending. Small changes can add up to big results over time,” Jones explained.
Plan, Plan, Plan
Planning is also essential at this stage. “Use this time to revisit or create a financial plan. Think about how you want to spend your retirement years. Whether you plan to stay in your current home, travel extensively or relocate, having a clear vision helps determine how much you need to save and the best way to get there,” Jones said.
Professional guidance can make a significant difference. “One of the smartest moves you can make is working with a financial advisor,” Jones said. “Many people feel overwhelmed managing their investments. An advisor who understands your full financial picture can help you make confident decisions and stay on track.”
With two decades or more before retirement, there is still time for compound interest to work in your favor. However, the power of compounding is stronger the earlier you start. That makes steady saving and smart investing even more important in your 40s. If you feel overwhelmed, a financial advisor can help you prioritize your goals. This might mean catching up on retirement savings, paying down debt or saving for your children’s education.
Make More Money
Increasing your income can also boost your savings efforts. That could mean negotiating a raise, exploring new job opportunities or starting a side hustle to bring in extra money.
Feeling behind on savings in your 40s can be stressful, but experts agree it is never too late to make progress. Focus on what you can control. Consistent saving, wise investing and commitment to your long-term goals will make a difference. Every step forward counts.
Some people in their 40s pursue the FIRE movement, which stands for financial independence and retire early. This approach encourages saving 50 percent or more of your income to retire decades ahead of schedule. Even if FIRE is not your goal, aiming to save 20 to 25 percent of your income while you can will accelerate your wealth growth.
Diversify Your Income
Finally, consider additional income streams such as freelancing, real estate investments or side businesses. These options can increase your savings potential and may offer tax advantages.
Your 40s are a powerful time to take control of your financial future. By starting now and staying consistent, you can build a secure retirement and enjoy peace of mind for the years ahead.
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This article originally appeared on GOBankingRates.com: I’m in My 40s and Still Figuring Out How Much I Should Have Saved — Expert Weighs In
