Saving money is an important job at any age, but once you reach your 40s you will have a greater need to save money to retire. Savers in their 40s and 50s are usually left to save for retirement, given the traditional age of 65 years old, but by emphasizing savings now you can set you up for a dream-worthy retirement. So let’s explore ways to save money for retirement in your 40s and 50s.
11 Tips on How to Save Retirement in Your 40s and 50s
If you want to save money for retirement in your 40s, you are not alone. Many medium-term workers begin to highlight savings for retirement. Below are some strategies you will pursue when starting savings for retirement.
1. Pay off high interest debt
Please assess your financial situation before starting serious conservation. According to Credit Karma, people between the ages of 43 and 58 carry more than $60,000 in debt than any other age group.
If you have a high profit, it is best to create a plan to pay it off as soon as possible. Not only can a large debt burden hinder your savings for retirement, it can also cost thousands of interest payments.
2. Funding your tax accounts will be a priority
Tax accounts are specifically designed to help savers build retirement nest eggs. Some common tax advocated retirement savings solutions include 401(k), 403(b), and a simple 401(k) plan. (See more details on 403B vs. 401K.)
If you contribute to a tax retirement account, such as 401(k), you will donate pre-tax dollars. Once you enter an account, your contribution increases tax-free. Once you are ready to withdraw funds upon retirement, you will be paying taxes on the funds.
The IRS also limits the amount you can save on your tax account each year.
If you are able to donate money to a 401(k) or similar option, consider making funding for this account a priority. This is especially true when employers provide a matching contribution.
3. Focus on spending
In a perfect world, you can save money on retirement without cutting your spending. But that is usually not possible. When it comes to saving for retirement, most of us have to make some tough choices.
Below are some options to consider:
Children’s education expenses
Start by looking at other big savings goals. Many parents saving for retirement may also want to pay for their children’s college education. But the reality is that you may need to prioritize savings for your own financial future.
If you are late in saving for retirement, you may want to chase your savings before paying your child’s college tuition. It may be difficult to say, but I recommend that you be honest with yourself and your child as soon as you decide.
Annual spending
You also need to consider your annual spending options.
For example, you may need to prioritize savings for retirement across a luxurious vacation budget. Or choose to save more instead of buying a more expensive home.
A honest look at your budget can help you determine where you can potentially cut back to contribute to your retirement savings. It is difficult to pass on spending at this point, but planning is important.
Be honest with yourself about your spending and your retirement goals. It works to achieve the optimal balance for the current situation without ignoring the future.
5. Save with IRA
Individual Retirement Agreements (IRAs) are a type of account designed for retirement savings and are a great way to learn how to save for retirement in your 40s. There are several types of IRAs, but traditional IRAs and Roth IRAs are the most common.
Traditional IRAs are tax options where your contributions are tax-deductible.
In contrast, contributions to a Ross IRA are not tax-deductible, but the eligible distribution is tax-exempt.
Whether you have access to the 401(k), the IRA is a valuable savings tool. If possible, consider funding limits to this account. If you qualify under your income limit, please note that you can have both a traditional IRA and a Roth IRA.
6. Consider a taxable brokerage account
Taxable brokerage accounts offer another location to hide retirement savings. Essentially, this account is a designated location for investing in after-tax funds.
For example, you might open a taxable brokerage account through a platform like Vanguard to build an investment portfolio.
The funds you donate to taxable brokerage companies come from after-tax funds, but these accounts do not have the same restrictions as tax-based retirement accounts. So you can withdraw funds from these accounts from these accounts, regardless of your age.
In general, it is useful to invest through a taxable intermediary account after achieving contribution limits to other types of accounts.
If you withdraw funds from these accounts, you may be liable for capital gains tax, so consult a tax professional if necessary.
7. Be careful about asset allocation
Not all investments are created equally. When building a portfolio for retirement, it is important to balance the risks of your situation appropriately.
Of course, diversifying your portfolio is ideal and a big part of how you can save retirements in your 40s and 50s. However, for many investors in their 40s and 50s, it makes sense to invest more stocks on the road to retirement.
In addition to stocks and bonds, other assets can make useful additions to your portfolio.
Don’t know how to invest in retirement at age 40? A simple investment portfolio may be the right solution. Check out our guide to our 3-fund portfolio.
8. Track your progress
No matter how much you need to save, you may not have made much progress at first. This is because it takes time for the blending power to settle. However, they do not give up hope and do not learn “how compound interest works.”
Once you’ve moved through the process, you’ll have time to track your progress along the way. This can be done with a simple spreadsheet or a simple financial planning app like Empower.
Consider setting a time to track progress regularly towards your retirement savings goals.
Personally, I check in my financial advances twice a year and choose to use a simple spreadsheet. However, you can choose to check in monthly or annually in the streamlined app to see where you are standing. Find a strategy that works for you.
9. Make sure you have the right insurance
When preparing for retirement, it is important to ensure that the appropriate insurance policy is in effect.
For example, as you get older, you can consider purchasing long-term care insurance. This insurance helps to cover the costs of paid support as you age.
On the other hand, there may be a time to cancel other types of insurance.
For example, if you don’t have a dependent, you may choose to terminate your life insurance policy. (Read more about period and life insurance.)
No one can rely on your income, eliminate that premium and redirect funds towards retirement savings. Knowing the insurance you need is an important part of how you can save money for retirement in your 40s and 50s.
10. Decide how long you want to work
Building nest eggs after retirement is a valuable goal.
However, for many people, achieving retirement savings goals can take longer than expected. If you are struggling to meet your retirement savings goals, consider the possibility of working longer.
By choosing to work longer as a professional goal, you will get the breathing chamber you need to save more money for your golden age. Also, working long may be a good strategy when you wonder how to save for retirement in your 50s.
11. Build a flexible side hustle
Side hustle is my favorite financial tool and helps you save money on retirement in your 40s and 50s. You can use Side Hustle to build income now. But flexible side hustles give you more options as you age.
Those with flexible side hustles may choose to drop their full-time job upon retirement, but may choose to continue their side business. In Side Hustle, this means you don’t have to eliminate all of your income, all of your earnings.
Instead, you can continue with a more flexible income stream to support some of your retirement costs.
Want to create a successful side hustle? Read Bola Sokunbi’s book, The Side Hustle Guide.
Expert Tip: Leverage chases contributions and celebrates your victory when you save
According to the IRS, those over 50 are eligible to catch up and contribute to their retirement savings accounts, such as the IRA, 401(k), and 403(b). Therefore, make sure to determine what the latest Catch Up Comprient Up Comment limits are on your IRS website.
That said, knowing how to save for retirement in your 40s and 50s is a big financial goal. Celebrate your progress when you save for retirement.
You can also treat yourself (on your budget) when you hit a big savings milestone. Enjoy the process and don’t forget to look back at where you started and where you are now and see how much progress you have made!
How much can you save when you’re over 40 to retire?
We recommend determining how much you need to retire comfortably so that you can save money on your retirement. Below are some strategies that will help you determine how much you can save.
Look at the big picture
Start by imagining the type of retirement you want to have. If you dream of traveling the world, you need more money than if you are happy to spend time in an affordable home. The reality is that if you want a more comfortable retirement, you need to save more.
In general, it is better to overestimate the cost of retirement. If your child leaves the nest, if your child leaves the nest, if you shrink in a low-cost living area, if you leave the more affordable housing costs, some of your costs may be reduced, but other parts of your life may be more expensive.
For example, medical costs can increase with age. This is something to keep in mind as well how you can save money on retirement in your 50s.
Use a reliable calculator
You can find a set of retirement calculators online and will help you know how to invest in retirement at age 40.
Take your time playing around with numbers and see how your current changes will have a major impact on your financial future.
Below are some great retirement calculators to choose from:
Details of catch-up contribution
The IRS has limits on how much you can save on different types of retirement accounts. But when you reach a certain age, you can make a more catch-up contribution.
Below we take a closer look at the contribution options.
401 (k)
As of 2025, according to the IRS, a Savers can donate up to $23,500 to a 401 (k). If you are at least 50 years old, you can donate an additional $7,500.
By contributing more to your retirement account, you can set it up for a more stable financial future.
IRA
As of 2025, IRA savers can donate up to $7,000 a year, but according to the IRS, they can add $1,000 a year for at least $50.
You can’t start saving any more up to 50, but you can start preparing your budget for increased contributions. Think about where you will withdraw your funds to maximize your contribution opportunities.
Is it too late to start saving for retirement at age 40?
It’s never too late to start saving for retirement at 40. Generally, getting started earlier can make a huge difference in building a safe retirement fund, knowing how to build discipline with hardworking planning, strategic investments, and savings.
Don’t be discouraged before you begin. Instead, start saving for retirement now and learn how to invest for retirement when you’re over 40.
How much should a 40-year-old save to retire?
The amount you should save for retirement will vary based on your unique circumstances.
However, some experts recommend saving 2-3 times more income for retirement by the age of 40.
For example, if you make $100,000 a year, I recommend saving between $200,000 and $300,000 for retirement in your 40s.
How much should a 50-year-old save to retire?
The exact amount for a 50-year-old retirement should vary based on your financial situation.
However, many experts recommend that a 50-year-old child should at least 3-6 times the salary savings.
For example, if you make $50,000 a year, I recommend saving about $150,000 to $300,000 for retirement.
If you want to learn how to save for retirement in your 50s, the biggest difference is that you have a more compressed timeline than you are 40 years old. This means that you may need to spend more aggressively and investing strategies.
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Start savings today to retire!
Savings for retirement is a good idea for any age. If you’re just learning how to save for retirement in your 40s and 50s, it’s perfectly possible to build a decent nest egg. Start by estimating your retirement spending needs and planning to build nest eggs you need.
Remember, it’s never too late to learn how to start investing or save money. You will be keen to create a retirement plan and follow it, and will work financially!