Starting Late: How to save for retirement in your 40s and 50s

Updated January 2, 2026  |   Published July 11, 2024 by Angela Talbot | Reading Time: 4 minutes

Categories:  
• Retirement
• Saving & Budgeting

We all try our best to save money, but sometimes life doesn’t allow it. According to , 1 in 5 Americans age 50+ have no retirement savings, and 61% worry they don’t have enough. The latest retirement account data suggests that by age 40 you should have 1.5-2.5x your annual salary saved. If you’re approaching your 40s or 50s and haven’t yet taken the steps to save for retirement, don’t fret. There is still time to change some of your money habits and set some funds aside. Here are some tips if you’re starting late.

Pay off debt first

If you still owe any debts, you will want to eliminate those before retiring. Removing those liabilities means you will have more money to put away, and less to worry about after you stop working. You can use payoff strategies like the snowball or avalanche strategy. Some more options to help you do this are:

Low-rate balance transfer credit cards
Transferring your credit card balance to a low-rate or 0% interest rate card means you can pay down your balance faster.

Debt consolidation loans
You can consolidate multiple accounts in one payment with a personal loan or home equity loan. These typically offer much lower rates than a credit card would, and consolidating multiple loans into one means you’ll have less payments to make.

Downsizing your home
If you’re still paying a mortgage on a multibedroom home and you no longer need all that space, you may be able to sell it and move to a smaller home of less value. This will help you earn a chunk of money to set aside. Which brings us to our next tip.

Liquidate assets

Even if your mortgage is fully paid off, downsizing your home is still a good idea to earn some money. Likewise, look at your other assets and see what you can let go of for some cash. Do you have a motorcycle or vanity car that you don’t necessarily need? Expensive clothes or jewelry that you don’t wear anymore? Decide what retirement looks like for you and make the decisions that will help you get there.

Maximize contributions to your retirement plans

If you’re contributing the minimum percentage to your employer sponsored retirement plan, it’s time to think about raising it. If your employer matches up to 5% of your contribution but you’re only contributing 3%, you’re missing out on what is essentially free money. So make sure you’re taking full advantage of your employer’s benefits.

Be aware that 401k and IRA plans have yearly contribution limits that you cannot exceed. However, those age 50 and older can make catch-up contributions. are:

• 401(k) or 403(b) -$24,500 with catch-up contribution of $8,000. Total = $32,500
• IRA – $7,500 with catch-up contribution of $1,100. Total = $8,600

Start saving in a Roth IRA

The main appeal of a Roth IRA is that your withdrawals are tax free. This means you’ll keep more money during your retirement than you would with a traditional IRA. Another benefit is that this account will not be tied to your employer, which gives you more control.

If you already have a Roth IRA, great! If not, you can rollover an existing retirement account into a new Roth IRA, but be aware you will likely have to pay taxes on the funds that rollover during that year.

Start Saving

Avoid risky investing

Now is not the time for you to risk losing. It’s important to mix up your investments. By that we mean, don’t have all of your money in the stock market – the riskiest of all investments. Try spreading your funds across less risky products like bonds – or store it in high yield accounts like CDs or Share Certificates. If you work with a portfolio manager or retirement advisor, express your goals so they can advise you on the right moves to make.

Open a Certificate

Consider insurance coverages

Everyone should anticipate rising costs for medical care as you age. Making sure you have the right amount of healthcare coverage can reduce what you have to pay out of pocket during your retirement.

Additionally, by switching other insurance policies like home, auto, life, or rental property insurance, you can save yourself some money on payments. Agents like those at our subsidiary, , work with a network of insurance providers so they can find you the right coverage based on your unique needs.

Change jobs

Exploring a new job opportunity can not only increase your salary but could potentially get you better benefits. Like an employer who will match a higher percentage of your 401(k) contribution, or who will give you better healthcare coverage, for example. If you do decide to change employers, don’t make the mistake of withdrawing the funds from your old 401(k), which will result in a withdrawal penalty. Rollover your funds to the new retirement plan instead.

Create a budget for daily spending

Finding out how much you spend on things like groceries, entertainment, transportation, and subscription services is a great place to start your budget. It’ll help you see what is essential spending and what is not. Perhaps you’ll be surprised by how much you’re spending on dining out and cut back by cooking at home more often. Budgeting tools like 91ºÚÁÏÍø First’s Money Management allows you to see your spending broken down into categories and track your budgeting to see how you progress. To learn more about how to use saving and budgeting strategies, click here.

Hack your house

House hacking is a term coined to describe the act of generating income from your home. Whether you do this by owning a multifamily and renting out the other units, renting out the extra space on your property to a roommate, or renting out garage space for storage. This is a way to generate passive income with assets you already have. If you have children who have recently moved out, you likely have extra rooms that you could be using to earn money for your retirement.

Continue working

We know this is not the ideal path for retirement, but if you still find your accounts are lacking after all your efforts, you aren’t alone. Postponing your retirement for a few more years means more time for saving and contributing to those retirement accounts with employer match. Many retirees will also pick up part-time or seasonal work to earn some extra spending money after they’ve retired.

 

The bottom line

It’s never too late to start saving for retirement. If you plan, strategize, and invest wisely, you can still retire comfortably.