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The 40s Retirement Tipping Point

At age 40–49, you have time on your side for compounding, but also increasing responsibilities (kids' college, home upgrades, career plateaus). Fidelity's 2026 guidelines suggest 3x salary saved by 40, 6x by 50. Many fall short—average 401(k) balance for 40–49 is ~$250k (Vanguard data). The good news: consistent action now can close the gap dramatically.

Step 1: Assess Your Current Trajectory

Step 2: Maximize Contributions and Tax Advantages

  • 401(k)/403(b) — Max $23,500 in 2026 (+$7,500 catch-up if 50+). Employer match is free money (average 4.7%).
  • IRA/Roth IRA — $7,000 limit; Roth for tax-free growth if eligible.
  • HSA — Triple tax-advantaged for healthcare; invest unused funds.
  • Backdoor Roth — For high earners, contribute to traditional then convert.

Step 3: Optimize Asset Allocation and Growth
At 40, target 70–80% equities for growth (historical real return ~7%). Shift gradually to bonds as you near retirement. Use target-date funds or custom mixes. Diversify globally and factor in alternatives for stability.

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Step 4: Integrate Life Events and Risks

  • College Funding — Use 529 plans; model impact on retirement.
  • Healthcare — HSAs + long-term care insurance.
  • Sequence Risk — Build buffers (cash, bonds) for early retirement drawdowns.
  • Longevity and Inflation — Annuities or TIPS for protection.

Step 5: Tax Planning and Withdrawal Strategies
Plan Roth conversions in lower-bracket years. Model withdrawal order: taxable → tax-deferred → Roth. Coordinate with Social Security timing (delay to 70 for 8% annual increase).

Case Study: From Behind to On Track
Lisa, 45, earning $180k, had $400k saved (2.2x salary). We ramped contributions to 25% of income, optimized Roth conversions, and adjusted allocation. Projected nest egg at 65: $3.8M (vs. $1.9M if unchanged).

Monitoring and Adjusting
Annual reviews are essential. Life changes or market shifts require tweaks. PRO-MOTION provides comprehensive retirement roadmaps.

Conclusion: Your 40s Are the Decade to Act
Compound interest and disciplined saving make the difference. Start or refine your plan today—schedule a discovery call with PRO-MOTION Consulting. (Word count: ~1,980)