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This is an educational estimate, not financial advice.
What this means for you
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Retirement Planning at Age 40
At age 40, you have about 25 years until traditional retirement age. This is a crucial time to assess your retirement savings and potentially increase your contributions to catch up if needed.
Key Considerations at 40:
- Catch-Up Contributions: You can contribute more starting at age 50
- Peak Earning Years: Often your highest earning potential
- Increased Focus: Time to seriously ramp up savings
- College Planning: Balance retirement and children's education
Recommended Actions:
- Aim to save 20-25% of your income
- Maximize employer matches and consider maxing 401(k)
- Take advantage of catch-up contributions at age 50
- Consider a more aggressive investment mix if behind on savings
Compare IRA & 401(k) Providers
| Provider | Account Types | Typical Fees | |
|---|---|---|---|
| Provider A | IRA, Roth IRA | 0.25%–0.40% | Open account |
| Provider B | IRA, 401(k) rollovers | $0 trading, ETFs | Open account |
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Hawaii Retirement Tips
- Check Hawaii-specific tax treatment for retirement account withdrawals.
- Look into any state-sponsored retirement plans or special rules for Hawaii residents.
- Benchmark your savings rate vs. Hawaii median income if available.
- Consider Hawaii cost of living when planning your retirement budget.
FAQ
How much should I have saved by age 40?
By age 40, aim to have saved 3 times your annual salary. If you're behind, don't panic - but it's time to significantly increase your contributions.
Can I catch up on retirement savings at 40?
Yes! While starting earlier is ideal, you can still build substantial retirement savings starting at 40 by maximizing contributions and taking advantage of catch-up contributions at age 50.
Should I prioritize retirement or my kids' college savings at 40?
Prioritize retirement. Your kids can get loans for college, but you can't get loans for retirement. Save for college only after you're on track for retirement.