Retirement planning by 40
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It's never too early to start preparing for retirement. To make sure you're on the right path, here are three retirement strategies to put in place before hitting the big four-oh. (See also these strategies for planning in your thirties, forties, fifties and beyond). If you adopt the right moves at each stage, you'll be more able to retire when and how you want.

1. Identify, prioritize, and plan

Let's face it. Your forties are a stage of life where you are pulled in many directions -- physically, emotionally, and financially. Whittling down credit card debt, paying off your own student loans, saving for your child's college education, and contributing to your retirement all compete for your dollars. But you don't have to let it overwhelm and discourage you.

Instead, identify your financial goals, prioritize your needs, and make a plan to address them.

First and foremost, devise a plan for reducing your debts. Paying them off faster lets you maximize retirement savings. Transfer any balances from high-interest-rate credit cards to one with a lower rate. Ideally, find a card with a zero-percent introductory APR. Then, take your balance, divide that by the number of months you have until the zero-percent-interest clock stops, and voila, you have a plan for eliminating credit card debt with the smallest monthly outflow possible.

2. Benchmark your retirement savings

Chances are good that by now you've asked yourself the burning question: "Am I on track?" To answer that, Fidelity recommends having the equivalent of twice your annual salary accumulated in retirement savings by age 40 (if you're curious, it's four times by age 50 and six times by age 60).

Keep in mind that these milestones are general rules with assumptions that might not fit your particular situation. Since every individual's circumstance differs, proceed with caution when using retirement savings calculators. Seek advice from a financial planner for more customized guidance.

3. Pump up your contributions

If you fall short of your benchmark, amp up your retirement plan contributions. Luckily for you, the contribution limits are quite generous: $17,500 for 401(k), 403(b), and 457 plans for 2013. And thanks to the phenomenon of compound interest, by upping your retirement contribution now, you won't need to save nearly as much money later.

Here your strategy is to contribute at least enough money to your 401(k) to get the maximum match your employer offers. But if you're flush with cash, why stop there? Invest as much as you can into your retirement plan at work. If you already max out your plan contribution (and a huge high five if you do!) or if you'd like to add some tax diversification to your overall plan, contribute to a Roth IRA. Just make sure you meet the eligibility requirements before doing so.

Get started today

Retirement is getting closer with every passing day. But before age 40, you've still got plenty of time to save. By identifying your financial goals, prioritizing your needs, and contributing enough toward your retirement savings, you'll reap the glorious reward of a retirement on your terms.

Nicole Seghetti is a contributing writer to The Motley Fool.



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comegetsomenowevan

Junkman is scapping copper, aluminum, steel, and Obama stickers attached to the car, because welfare and food stamps don't cut it.

July 01 2013 at 6:10 PM Report abuse -4 rate up rate down Reply
1 reply to comegetsomenowevan's comment
comegetsomenowevan

scrapping

July 01 2013 at 6:10 PM Report abuse -4 rate up rate down Reply
rich_paddlyrich

From the halls of Congress to Governor’s mansions and statehouses across the country, Republicans continue to wage war on the Affordable Care Act, threatening to take coverage and care away from the millions of Americans the law is already helping.

In the House, Republicans took up their 37th vote to repeal Obamacare on Thursday, and 20 states currently oppose the Medicaid expansion that could offer care to some of the neediest Americans who currently have no insurance and little means to afford health care, even when they’re sick.

But thanks to charity efforts, there are still some options, and this week Rev. Al Sharpton announced Urgent Care–an important initiative MSNBC is taking as it renews its commitment to provide health care to those who lack insurance by joining forces with the National Association of Free and Charitable Clinics (NAFC).

July 01 2013 at 9:47 AM Report abuse +1 rate up rate down Reply
1 reply to rich_paddlyrich's comment
elaineen

Only you and Tawana Brawley trust Al Sharpton

July 01 2013 at 4:19 PM Report abuse +1 rate up rate down Reply
h.hughjardon

Wait...you mean you're supposed to plan for retirement?

June 30 2013 at 9:33 AM Report abuse -4 rate up rate down Reply
Carly

The key to saving for retirement is to start early and be consistent. Save with every paycheck and take advantage of any employer matching plan. Unfortunately most in their 20s and even 30s and 40s don't think about retirement. On a related note the site retirementandgoodlivng offers some good information about finance, health, retirement locations, etc. Worth checking out.

June 30 2013 at 8:48 AM Report abuse +1 rate up rate down Reply