This post was written as part of the M-Network’s Money Matters for All Ages project. See the bottom of this article for the full list of participants and links to their articles. Please check back daily as I will update the links as new articles are posted! Also, if you are blogger and would like to join into the discussion, feel free!

So, the 40th birthday has come and gone, and you’re closer to retirement than ever. If you’re anything like the majority of Americans, you’ve been putting off serious retirement saving until ‘later‘.

Wakeup Call!! Later is NOW!!

If you’ve been putting off thinking about retirement, time is of the essence. You only have about 25 years to build up a nest egg that will support you (and possibly your spouse) for the remainder of your life. Not to panic anyone, but this is a SERIOUS consideration starting in your 40’s.

Your 40’s are not too late to kick it into high gear and get everything in order. Remember, you’ve got some things working for you now;

• You probably have a well-established career paying significantly more than what you made in your 20’s and 30’s.
• You have an array of skills and experience that should nearly guarantee you another position should your current position ‘go away’. This gives some mental stability, and confidence to start contributing more towards retirement.
• You’re not as concerned with ‘things’ as you might have been earlier in life. The new car isn’t as appealing, the huge house, not a priority. More important things, like college funds and IRA’s start to hit your radar.

From DINK to SITCOM

As time marches on, life changes affect you and your family. You go from the Dual Income No Kids yuppie power couple, pulling down huge amounts of money, to the Single Income, Two Children, Oppressive Mortgage, family with 2.5 kids, a dog and a mortgage. How did this happen!!!  (aside from the obvious).

"Tired of lying in the sunshine
Staying home to watch the rain 
And you are young and life is long
And there is time to kill today
And then one day you find
Ten years have got behind you
No one told you when to run
You missed the starting gun"

From Pink Floyd – Time

 

So, what can the 40 year old start doing to catch up?

Start with the Basics

Planning on retirement while in your forties has to take into account whether you have been saving, or have put it off until now.

For The Tortoises (Early Savers) – You should already have nest-eggs in the making, the only thing to keep in mind now is to watch and maintain. Risk in your investments needs to be managed a little more towards the conservative side starting in the 40s, but not so much that you stall your investments. You have a long timeline still until retirement, so build with some aggressiveness, while starting to think about what you can do to protect the nest-egg you have.

For the Hares (Late Savers) – There is no time like the present to get started. You’re at a disadvantage against the Tortoises. That means that you’re going to have to concentrate a larger percentage of your income (up to 40% or more) towards your retirement, to reach a similar retirement number. 40% is a BIG number for those not used to putting hardly anything away. It’s time to modify the lifestyle.

Trim Expenses – By simplifying your lifestyle and trimming unneeded expenses (do you REALLY need that corvette or new coat?) you do two thing immediately.

1. Simplify your life In preparation for being able to enjoy the lifestyle you can afford at retirement. Get used to it now, and it won’t be such a shock at retirement age
2. Clean up your finances   This gets rid of unnecessary debt you have to support and frees up more money to put towards retirement. Also, if you enter retirement with tons of debt, it’s going to be no fun trying to support all that debt with a severe decrease in revenue.

Plan for Life Expenses – Again, a Hare/Tortoise comparison. Upcoming life events need to be planned for if not already done.

1. College Expenses If you have kids, and you want them to go to college, you should have thought out how to help them accomplish that. It shouldn’t be to the detriment of your retirement however! The kids have many more options on HOW to go to college than you have on HOW to retire. If it really comes down to which to fund,  err on the side of retirement. The kids will have to just accept the fact. It’s either that or pay for college AND take care of their parents in retirement. Talk early, and get everyone on the same page about the topic.
2. Disposition of Property Many retirees don’t need the huge house they brought the family up with, so what to do with it should be discussed and considered. The parents may want to leave it to the kids, but the KIDS MIGHT NOT WANT THE RESPONSIBILITY. Again, talk about it. You’ve got years to go before the decision needs to be made, but that doesn’t mean you can’t get everyone’s opinion on the matter.
3. Retired Life With health care getting better and better each year, it’s not inconceivable that you might be in retirement longer than you expect. Start making your "Life List" of things to do, and keep adding to it until you get to retirement. The worst thing that can happen is you get to the end of that list and say "Now What?" A happy retirement is an active retirement. If you stop doing anything, you start  doing nothing.
4. Leaving it Behind At some point, you’ll be gone. It’s not a pleasant thought, but a necessary one. Get things in order and make sure it’ll happen how you want it to. Wills, insurance policies, financial records, etc. make sure your dependents know what to do and where they are.  Let them remember you for the good times you had together, not that you died and left them in the lurch.

Looking Back

With all the preparation and the discussion about what happens after you are gone, don’t forget the most important part;

Life is to be lived! We shouldn’t strive to leave behind a good looking corpse, we should instead slide into our grave on a motorcycle, body worn and used with activity, all the while saying; "Man! That was a GREAT ride!"

Plan for the future, but don’t forget to live life in the process. 

I hope you enjoyed this article. Here’s are the other articles in the Money Matters for All Ages series:

• Introduction: Financial Strategies for Infants and Young Children @ My Dollar Plan
• Preschoolers: Teaching Preschoolers About Money @ I’ve Paid for This Twice Already
• Children and Pre-Teens: Personal Finance for Children and Pre-Teens @ Being Frugal
• Teenagers:
  • Teach Your Teen the Basics of Money Management @ Gather Little by Little
  • Money Advice to My Teenage Son @ DebtFREE-Revolution
• College Age: College Money Matters @ Mrs. Micah
• The Twenties:
  • Money Matters for All Ages – The 20’s @ Cash Money Life
  • Financial Advice For Your Twenties @ Remodeling This Life
• The Thirties:
  • Money Matters for All Ages – The Chaotic Thirties @ Moolanomy
  • Personal Finance Advice For Your 30’s @ My Two Dollars
• The Forties: The Forty Year Old’s Wakeup Call @ Credit Withdrawal
• The Fifties:
  • You’re in Your 50s – Wake Up and Start Saving @ Millionaire Money Habits
  • Retirement Objectives in Your 50’s @ Credit Withdrawal
• The Sixties: Easing into the Golden Years- the 60’s and Beyond @ Chance Favors
• Retirement:
  • 4% Withdrawal Rule for Retirement @ Quest For Four Pillars
  • retirement in the UK @ Plonkee Money
• Wrap up and highlights: Money Matters for All Ages: The Complete Guide @ My Dollar Plan