How Much Money You Should Have Saved by 40 to Stay Financially Secure

By the time you reach 40, your income may be higher than it was earlier in your career, but so may your financial obligations. Between everyday costs and retirement saving, it’s natural to ask how much money you should have set aside to feel financially secure at 40.

There isn’t one savings amount that fits everyone, but financial professionals do offer benchmarks that can help you gauge your progress. Here’s what experts say you should aim for by 40.

What Your Savings Could Look Like by Age 40

Fidelity says a good target is to have retirement savings equal to three times your annual salary by age 40. So if you earn $50,000 a year, that would mean aiming for $150,000. If your salary is $100,000, the goal would be $300,000.

Brandon Cox, a certified financial planner at Coastline Complete Wealth, said that three times salary is a useful guideline, but he cautioned against becoming fixated on one exact figure.

“I would focus more on the pattern of saving instead of what you have saved already,” Cox said. “I wouldn't get too hung up on that number.”

Sterling Neblett, a CFP and founder of Centurion Wealth Management, said your target will also depend on your expected retirement age, living costs, taxes, investing approach and future income sources.

For example, someone planning to retire at 55 and spend $15,000 a month will need far more saved than someone who expects to work until 70 and live on $6,000 a month.

Factors That Shape Your Ability To Save

Your income, expenses and inflation all play a role in how much you can save by 40.

Inflation can make retirement saving harder because more of your income gets absorbed by everyday costs. Even when pay goes up, higher prices for housing, groceries, transportation and other necessities can reduce the amount you’re able to put away.

“Inflation affects both sides of the equation negatively,” Neblett said. “It increases today's cost of living, which can make it harder to save, while simultaneously increasing the amount someone will likely need to support their lifestyle in retirement.”

Where you keep your money also matters. Funds held in a savings account, Roth IRA or traditional 401(k) can have different tax consequences, growth potential and withdrawal rules.

Neblett also pointed out that taxes, liquidity and expected investment returns influence how far your savings can go in retirement.

Lifestyle inflation can make saving harder as well. If spending rises every time your income does, there may be less left over for retirement contributions.

What To Do If You’re Not There Yet

If you haven’t reached this benchmark by 40, there is still time to build toward it. If you plan to retire at 65, you still have 25 years to save and invest.

Cox advised focusing on steady saving habits rather than trying to make up for lost time all at once.

“You don't need to hit home runs,” Cox said. “You need to consistently save, invest and give your money time to grow.”