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3 Things to Do if You’re in Your 40s With No Retirement Savings

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Saving for retirement can’t be done at the last minute; it takes decades of consistent effort to save hundreds of thousands of dollars. When you start early, you still have compound interest on your side. But the longer you wait to begin stashing money in your retirement account, the more you’ll need to save each month.

If you’ve reached your 40s with nothing in your retirement fund, it will be more challenging to retire comfortably. But it can be done if you follow these three steps.

Set a savings goal

The first step is figuring out how much you need to save and exactly how you’ll get there.

When determining your goal, first think about your retirement expectations. At what age do you plan to retire? How many years do you think you’ll spend in retirement? How much do you expect to spend each year once you retire?

Really think about the answers, because they will significantly affect how much you’ll need to save; if your estimates are off, you risk running out of money. For instance, if you assume you’ll spend 15 years in retirement but you live for another 10 years on top of that, you may end up running out of savings roughly halfway into retirement.

You can’t predict exactly how long you’ll live or how much you’ll spend each year. But instead of winging it and hoping for the best, try to be as educated and accurate as possible when coming up with an estimate.

Next, think about any other sources of income you will have in retirement — like Social Security benefits or a pension. You can get an estimate of how much you can expect to receive from Social Security by creating a mySocialSecurity account to give you an idea of what your future benefit amount will look like based on your real earnings. That will help you figure out how much you’ll need to save on your own. For example, if you estimate you’ll spend $50,000 per year in retirement and expect to receive $20,000 per year in benefits, that means the other $30,000 per year will need to come from your savings.

Finally, run your numbers through a retirement calculator to see how much you’ll need to save by retirement age and what to save each month to reach that goal. Create a savings plan, and if you have access to a 401(k) that offers matching employer contributions, factor that into your plan so you know how much must come from you. Then, start socking money away.

Adjust your budget to save more

When you know how much you should be contributing to your retirement fund each month, you may need some budget adjustments to find the extra cash to save. Depending on just how much you must save each month, this step could be easy or nearly impossible.

If you need to be saving several hundred dollars per month (or more), it can be tempting to throw in the towel and assume you’ll never be able to. But it’s easier than you may think to find extra cash in your budget.

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Linda Barbara

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