Playing the Retirement Catch-Up Game in Your Forties

So, you’re in your forties and have little to no retirement savings.  “What shall I do?” you ask yourself.  First thing you need to do is not lose hope.  You have a challenge ahead of you but you can win this battle.  It’s something I like to call “Retirement Catch-Up.”  At its core, it’s a fairly simple game.  You have a certain time horizon and need a certain amount you need before you can retire.  With the proper knowledge, anyone can win this game.

Here’s you have a sort of “cheat sheet” to win the retirement catch-up game:

Max out your 401(k) plan immediately

This will have the greatest impact on whether or not you win this game.  By fully maxing out your 401(k) plan, one could potentially retire with a million dollars.  Factors like retirement age and percentage returns will increase or decrease your 401(k) savings at retirement.  Assuming you can maximize your 401(k) plan, you need to consider diversification and ensure that your money is spread out over multiple industry sectors.  Also, watch out for costs as some 401(k) plans offer funds with extremely high management fees.

Max out your Roth-IRA immediately

What I like about a Roth-IRA is that it’s tax free compound interest.  Since all the money that you invest within a Roth-IRA is post tax dollars, your money will keep on growing with the market and you will never pay another cent in taxes during retirement (from the Roth).  After maxing out a 401k, maxing out your Roth-IRA is your next best move.  It’s the perfect combo with a 401k plan.  One thing you have to take into consideration are the income limitations.  Assuming you’re trying to play catch-up, this may or may not affect you.  If you are single and make over $105,000/year then you are limited in the amount you can contribute.  So, watch out for this depending on your own personal life situation.

Don’t forget about deductions

Retirement catch-up

There’s still time for retirement catch-up if you haven’t already saved.

Assuming that you are later on in your life, you may own a house or you may run a business.  You need to be fully aware of the tax deductions that you are allowed.  This can end up saving you some serious money and you can invest it right away.  I would recommend sitting down with an adviser or tax professional and going through all your expenses and doing some serious investigation into whether or not you have missing deductions you can take advantage of.

Home Equity is your new best friend

There is a ton of debate about this, but borrowing against the equity of your home is an option that is available to you during retirement.  I’ve heard of quite a few retirees tapping into this source to help out with living expenses.  A reverse mortgage can give you money now for your home.  Another great way to use your home equity is to sell your home outright.  Now that your kids are grown up, do you really need that massive yard and extra bedrooms?  You should think about this as there is a possibility for a nice profit out the door.  Why not downsize anyways?  It will cost you less during retirement and reduce the burden of maintenance and upkeep.

Protect your income at all costs

Did you know that more than 50 million Americans report some sort of disability each year?  That number is shocking but it should also be a wake-up call for you.  Lesson here?  Get as much insurance as you can for the lowest cost possible.  You want to protect your income against unfortunate events.  Although I’m in my 20’s, I recently upped my disability insurance to the maximum allowable for an extra $2/month.  This is a small price to pay for the peace of mind knowing that I will be covered if I get hurt.


What’s the big picture here?  Well here’s the deal.  If you are in your 40’s and haven’t saved a dime for retirement, the time is now!  You can’t look at the past and feel sorry for yourself.  You need to take immediate action.  If you follow this advice, you can be well on your way to retiring and providing financial security for yourself and your spouse.  Nobody wants to work in their 70’s, I know I don’t.

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Published or updated December 30, 2014.


  1. Every one always suggests that you max out your 401k but if you work for a company that doesn’t offer employee matching would the advice still hold?

  2. Since a 401K is a pretax deduction, the IRS is subsidizing you savings. Why wouldn’t you take advantage of that? Even if you start in your forties, you have close to 25 years to accumulate the savings you will need.

    • Not arguing with the advice. Just wanted to know if it would still be the best place to start. All the advice is wonderful and I wanted to start implementing some of it immediately.

  3. These are all great tips for planning retirement a little later than usual. I myself am a little over 40 years old and recently started worrying about my retirement savings. After reading your article, I feel reassured that I won’t have to spend my retirement pinching pennies like I originally thought. Thanks for the helpful tips and some much needed encouragement.

  4. infinite banking says:

    those not yet in their forties should learn some valuable lessons from the baby boomers who were planning on retiring but couldn’t because their retirement plans got crushed.

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