If you're in your 40s, retirement is roughly 20 years away — close enough to plan concretely, far enough that compounding still does most of the work. It's also the decade when income typically peaks, which makes it the best window to accelerate savings.
Take stock of where you are
Before adjusting anything, get a clear picture. Add up every retirement account balance — 401(k)s from current and previous employers, IRAs, SEP-IRAs — and compare the total to your target. A rough benchmark: your retirement savings at 40 should be roughly 3× your current salary; at 50, 6×.
If you're behind, that's not a reason to panic — it's a reason to act now rather than in five years.
Max your tax-advantaged accounts first
- 401(k): $23,500 in 2025 ($31,000 if you're 50+)
- IRA or Roth IRA: $7,000 ($8,000 if you're 50+)
- HSA (if on a high-deductible health plan): $4,300 individual / $8,550 family
An HSA is particularly powerful — contributions are pre-tax, growth is tax-free, and qualified withdrawals are tax-free. After 65, it functions like a traditional IRA for non-medical expenses.
Rethink your asset allocation
The old rule of "110 minus your age in stocks" is too conservative for most people today given longer retirements and low bond yields. At 45 with a 20-year horizon, a 70–80% equity allocation is reasonable for most risk tolerances — but the right mix depends on your income stability, other assets, and when you actually plan to retire.
Sequence-of-returns risk — the danger of a major market drop in the first few years of retirement — is the biggest portfolio threat at this stage. Building a 2–3 year cash buffer before you retire is one of the most effective mitigations.
Don't overlook the tax picture
Your 40s are often peak earning years, which means you're likely in a high tax bracket. Strategies worth examining with a financial planner:
- Roth conversion laddering — converting traditional IRA assets in lower-income years
- Tax-loss harvesting in taxable accounts
- Deferred compensation plans if offered by your employer
- Charitable giving through a Donor-Advised Fund if philanthropy is part of your plan
The decisions made in your 40s compound in both directions. Starting a coordinated financial plan now — rather than at 55 — is the single highest-return move available.