What Delaying Investing Until 40 Could Mean for Your Retirement

Beginning to invest at 40 leaves less time for your money to compound than starting at 25, but it does not mean retirement savings are out of reach.

The impact can be large, although the final outcome depends on returns, fees and how regularly you contribute. Here is a look at the math and the steps late starters can take.

How Starting at 40 Can Affect Retirement Savings

David Kassir, managing director of private wealth management at Manna Wealth Management, offered a simple illustration of why time matters.

If someone invests $300 a month from age 25 to 65 at a 7% annual return, compounded monthly, the account could grow to about $787,000. If the same person begins at 40 and keeps investing through 65, the total could be around $243,000. Those figures assume contributions are made at the end of each month and do not include fees, taxes or inflation.

The 25-year-old would contribute $144,000, while the 40-year-old would put in $90,000, yet the final balances would differ by roughly $544,000.

“The gap is not effort. It is time,” Kassir said.

These are only hypothetical examples, not promises of future returns. The SEC notes that investing does not come with a guaranteed rate of return.

What the Calculations Do Not Include

The example uses a steady return, but markets do not move in a straight line, and fees can chip away at gains over time.

Kassir said the projections rely on consistent contributions, inflation and market performance. In reality, “real markets lurch up and down.” Even so, the longer the investment horizon, the more compounding can work in your favor.

How to Begin Investing at 40 Without Taking Too Much Risk

A shorter time frame can make saving feel urgent, and that urgency can lead some people to chase risky investments. Kassir cautioned against that approach.

Instead, he recommended increasing savings, taking full advantage of any employer match, raising contributions after pay increases and keeping a diversified portfolio. Diversification can help lower risk, though it cannot eliminate losses.

Trevor Houston, a financial advisor and CEO at ClearPath Wealth Strategies, also advised looking at the full financial picture, including emergency savings and high-interest debt, before focusing only on investment growth.

“You can’t control when you started investing. You can only control what you do from here on out,” Houston said.

Employer Matches and Catch-Up Contributions Can Help

An employer match can be one of the most effective ways to boost retirement savings because it is “free money,” said Michael Schramm, a chartered financial analyst (CFA) and author of the forthcoming book “Emotional Finance.”

Eligible workers may also be able to make catch-up contributions, depending on age, plan rules and other requirements. Tax-advantaged accounts can provide benefits depending on the type of account and individual circumstances.

For 2026, the 401(k) contribution limit is $24,500, according to the IRS. Workers age 50 and older can contribute an additional $8,000, and those ages 60 to 63 may qualify for a higher catch-up limit of $11,250.

The 2026 IRA limit is $7,500, with an extra $1,100 catch-up contribution for people age 50 and older.

Do Not Let Regret Stop You From Starting

Starting earlier would have been better, but starting now is still better than delaying further.

“Your starting point does not have to dictate your endpoint,” Houston said. Choose a contribution you can maintain, automate it if possible and review your plan as your income or situation changes.

Starting at 40 may leave less time to save, but steady contributions and a realistic plan can still help you work toward retirement.