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Wed, Apr 16, 2025, 5:15 AM 6 min read
Picture John, a 42-year-old who hasn’t started putting away money for retirement yet. He doesn’t have any savings or even an emergency fund set aside for unexpected expenses, and he’s starting to panic. Sound familiar?
If you're in your 40s and haven’t put much thought into retirement savings, now's the time to get serious. The need to set specific, realistic goals for retirement savings becomes crucial at this stage in life.
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It’s not too late to make a dent in building your retirement fund, but the clock is ticking. Here are some strategies to help you catch up and set yourself up to maximize savings.
Starting to save for your golden years in your 40s might not seem ideal, but it’s critical for your financial future. Retirement is closer than you think, and delaying savings means less time for compound interest to work its magic.
You may not have decades of growth like someone who started in their 20s, but there’s still time to make an impact. Relying on just your monthly Social Security benefits isn’t a good idea since, depending on your lifestyle and overall health, expenses can add up quickly. And keep in mind that Social Security benefits are only meant to replace about 40% of your retirement income — you’re expected to account for the rest.
An emergency fund is also key. Life throws curveballs, whether that be a job loss, medical issues, or unexpected car repairs, and without savings, you could end up deep in debt. Having a financial cushion helps you handle these surprises without relying on high-interest loans or credit cards.
As you age, your expenses change. You might support kids in college or care for aging parents, and savings will help with these rising costs, including health care. Starting now gives you the resources to cover future needs.
Saving in your 40s also offers tax breaks, like 401(k) and Individual Retirement Account (IRA) contributions, that lower your taxable income. If you expect a higher tax bracket in retirement, a Roth IRA is worth considering, since withdrawals are tax-free.
Don’t forget about inflation. As living costs rise, your savings will help keep pace.
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