At 40, your life experiences may look different from your peers. Some people will be hitting milestones like buying a house, while others are sending kids off to college or hitting their peak earning potential.
But no matter what stage of life you find yourself in, almost all 40-somethings share a concern: Do I have enough money in my retirement savings?
We talked to financial advisers and other experts about how much retirement savings you need, if you should strive toward other financial goals that don’t involve your brokerage account balance, and whether 40 is the right time to double down on contributions to your retirement accounts.
How much money should you have saved by 40, according to financial experts
By age 30, the advice is to have your annual salary saved. By age 40, your savings goals should be somewhere in the neighborhood of three times that amount. According to 2023 data from the U.S. Bureau of Labor Statistics, the average annual income hovers around $62,000. This means retirement savings goals for 40-somethings should tip the scales at around $200,000.
While you might have some competing priorities clamoring for your savings by age 40, Certified Financial Planner and author Lauryn Williams says your retirement plan should be front and center.
“In your 40s, your instinct will be to save for your kid’s education because you won’t want them to struggle with student debt, but you should really be ramping up your retirement savings instead,” she says.
How much do most people have in their retirement account by 40?
Unfortunately, the average retirement account balance for most 40-year-olds doesn’t top six figures. While the 2022 Survey of Consumer Finances from the Federal Reserve indicates the average net worth for U.S. households is just over a million dollars, Empower says the average retirement savings in a 401(k) for the 40-45 age group is $90,774.
While you may feel relieved you’re not the only one who hasn’t met your retirement savings goal, Brent Weiss, CFP® and Head of Financial Wellness for Facet, says achieving financial independence is the real savings target.
“The most important thing you can do is sit down and define the life you want to live and the things that matter most to you so you can be more intentional about how you spend your money,” Weiss says.
Read more: Americans continue to ransack their retirement savings, survey finds
A step-by-step guide to prioritizing savings at 40
If you can’t save your annual salary — much less multiples of it — there are things you can do to maximize your income and put more money toward that retirement nest egg.
Step 1: Start retirement planning if you haven’t yet
If you don’t have a financial plan for your retirement, now is the time to create a first draft. Consider what you want your retirement to look like — do you want to travel, continue working part-time, or something else? Talking to a financial professional can help you map out the specifics, such as whether you’ll have enough money to cover your living expenses.
Peter Lazaroff, CFA and CFP® and host of the Long Term Investor podcast, cautions that retirement planning is a moving goalpost. “From your 30s to your 50s, the difference between what you think you want retirement to look like versus what you want out of retirement when you get to 50 is drastically different.”
Read more: Retirement planning: A step-by-step guide
Step 2: Focus on earning
Peak earning years are generally considered to be in your late 40s to early 50s, but it’s never too early to start building a better salary. Check the median salary for your profession and take steps to maximize your ability to earn a higher income, whether that’s earning an extra certification in your field, looking for openings at better-paying companies, or simply making the case for a raise.
And don’t underestimate the value of the employer match on your 401(k). For retirement savers, it’s worth noting that…
Read More: How much money should I have saved by 40?