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How much money should you have saved by age 40?

What we'll cover

  • Average retirement savings by 40

  • Goals and savings categories you should have 

  • Tips for increasing retirement savings

Once you hit a certain age, you may start thinking about having enough savings for retirement. You may think more about it when you hit milestone decades, such as when you turn 40.

For many, this decade is marked by growing families (and the accompanying college funds) and a mortgage. Don't forget the regular bills that arrive every month like clockwork.

Even if you get promotions and pay increases at work to help offset living expenses, you’ve still got a retirement plan to tend to. These savings priorities tug at your wallet from all directions. You're not alone if you’ve wondered, “Am I saving enough?” or “How much retirement savings by 40 should I have socked away?”

While everyone’s life is different (your specific savings situation is personal to your financial circumstances, lifestyle and future goals), being aware of benchmarks and ranges can help you know if you’re on the right track — and whether you need to turbo-charge your savings.

With that in mind, here’s a guide to help take some of the guesswork out of where you should be financially in your forties. We'll look at the amount you should have saved by age 40, including the average retirement savings as well as savings expense categories. We'll also look at some tips to help you increase your retirement savings.

Average retirement savings by age 40

Check out the average retirement savings by age, according to research by the Federal Reserve in 2019 to 2020:

  • Age 25 to 29: $9,408.51

  • Ages 30 to 34: $21,731.92

  • Ages 35 to 39: $48,710.27

  • Ages 40 to 44: $101,899.22

  • Ages 45 to 49: $148,950.14

  • Ages 50 to 54: $146,068.38

  • Ages 55 to 59: $223,493.56

  • Ages 60 to 64: $221,451.67

As you can see, the average savings by 40 is higher than $48,000 but likely lower than $148,000. However, it's worth noting that just because that's the average, that amount may not be what you might want to consider having saved. Keep reading for more information.

Savings expense categories 

What savings expense categories come to mind in this stage of life? Many 40-somethings cite emergency savings, health care, retirement planning, home costs and family expenses.

Emergency savings

No matter where you are in life or how old you are, the one thing you can always count on is the unexpected. That’s why it’s so important to have an emergency fund , which is cash you set aside in a savings account or online savings account for unforeseen expenses, like a sudden change in employment, a broken furnace, or the family pet suffering a major sickness or injury.

Ideally, your emergency fund should contain at least three to six months’ worth of living expenses — so if worse comes to worst, you can cover all your essentials without worry for a couple of months, from your mortgage to groceries to prescriptions.

Health care expense savings 

If you've ever gotten a bill from your doctor, you already know that health care is expensive.

The average retired couple age 65 in 2022 may need approximately $315,000 in after tax savings to cover health care expenses in retirement. However, that also depends on a few factors, including: 

  • Where you retire

  • How healthy you are

  • How long you live

It's worth considering now how you plan to pay for your health care expenses later on. For example, do you plan to use your 401(k), HSA or IRA to pay for health care expenses?

Consider enrolling and contributing to a health savings account (HSA), which can give you tax benefits. You save pretax dollars and potentially employer contributions, which you can grow and withdraw tax-free for federal and state tax purposes as long as you use them for a medical purpose.

Retirement planning 

The general rule of thumb for how much retirement savings you should have by age 40 is three times your household income.

The median salary in the U.S. in the fourth quarter of 2022 was $1,084 per week or $56,368 per year. By that measure, someone in their late thirties to early forties should have around $169,104 saved for retirement.

What if you're married? If you and your spouse have an annual household income of $95,000, you should aim to have $285,000 set aside by 40. A single 40-year-old who earns a $60,000 salary per year should strive to have $180,000 saved.

When looking at these numbers, it’s important to remember that every person and situation is different.

Ask yourself:

  • How much is my annual salary? 

  • What’s my ideal retirement age? 

  • What type of things do I hope to do in retirement?

If you want to live in high style while traveling the world, for example, you’ll likely need even more than the recommended three times your household income rule. But if you plan on downsizing your home and spending your time and money on the same hobbies you always have, perhaps you might not require quite as much.

Either way, don’t endure sleepless nights if your current retirement nest egg falls short of the recommended amount. While the reality of retirement may feel closer than ever, you still have time to contribute to your retirement account.

Those who begin putting money toward their retirement plan earlier are better off than those who don’t, thanks to compound interest, which is interest earned on your initial principal and your accrued interest. If you are just joining the retirement savings party — or stepping on the dance floor later than others — you have options as you get closer to retirement.

Employees who contribute to a 401(k), 403(b), or 457 can contribute up to $22,500 in 2023. Once you reach 50 years of age, you’re eligible to set aside an additional $7,500 annually in catch-up contributions.

The general rule of thumb for how much retirement savings you should have by age 40 is three times your household income.

Home costs

Once you feel comfortable that your emergency fund, retirement nest egg, and savings habits are on par with (or above) target amounts and aligned with your financial goals, it’s time to think about other things you might want to save for.Maybe your family has grown out of its home and it’s time to upgrade.

Family expenses

You don't want to miss any family expenses you need to save for, such as saving for college and even weddings. Let's take a look at some of the ways you can save for each.


If you want to ensure your children don’t face student loan debt, you can consider a 529 College Saving Plan or a savings account that offers a competitive rate of return, such as a certificate of deposit (CD) or a money market account .

  • 529 plans: 529 college savings accounts are accounts with high contribution limits that allow your money to grow tax free. You can withdraw your money tax-free at any time as long as you use it for educational purposes. You can use it for tuition, room board, fees, books, etc. Another bonus:  You can also deduct a portion of your contributions for your state income taxes. Some states offer a tax credit. Note that if you don't like your state's plan, you can invest in another state's plan.

  • Coverdell Education Savings Account (ESA): ESAs are plans that allow you to save on an after-tax basis and grow tax-free. Like 529s, you can withdraw them tax-free for qualifying expenses. ESAs are capped at $2,000 per year. However, you can tap into a wide variety of investment options and they are a bit more flexible than 529s, though your income can't exceed a certain amount. You can only contribute until your child turns 18.

  • Custodial accounts: Custodial accounts, such as the Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA), put you as a custodian on a savings account until your child turns the age of majority in your state. The benefit is that you can use the money for any reason, but that's also the downside of a custodial account. The student can use the money for anything as well, including to take an expensive vacation or buy a car, instead of using it for college. Funds may also affect your child's ability to receive financial aid.

  • Deposit accounts: You can also save in accounts you already own, such as an online savings account, money market account or a certificate of deposit (CD). 


The average cost of a wedding in America in 2022 was $30,000 ($36,000 including the engagement ring). If your child will get married relatively soon, and you’d like to help with wedding expenses, you may want to park some money in short-term investment vehicles that will remain intact, like high-interest savings accounts , which have a higher interest rate than regular savings accounts, or other cash equivalents like short-term Treasuries, which are short-term U.S. government debt obligations.

On the other hand, if you have a longer timeframe, you may want to consider longer-term investments like mutual funds, which are bundles of stocks and bonds grouped together.

Tips for increasing retirement savings 

One of the best things about being in your 40s is that you've done the hard work of building your career in your 20s and 30s and now have the money to show for it! Even if you haven't saved a dime toward retirement, you can still make retirement savings a priority and still end up with a fantastic nest egg.

To increase your retirement savings:

  • Get the most out of your 401(k): Your workplace retirement plan will give you a great way to get free money, because your employer will often kick in an employer match. Do everything you can to get the match— don't leave free money on the table!

  • Get out of debt: Debt can really wreak havoc on your savings and investments. If you have debt, try to get out of it as quickly as possible. The faster you get out of debt , the more you can contribute toward your retirement savings.

  • Create a budget: Budgeting , whether you use an old fashioned spreadsheet or a budgeting app, can help you get out of debt and contribute to all the different savings pockets in your life. Budget for your retirement fund, your monthly expenses (food, shelter, etc.) and even the fun stuff like vacations and entertainment.

  • Set reoccurring transfers: You can use technology to automate payments into your savings account. This takes a bit of the work off your plate and could help you build savings faster.

  • Leverage savings tools: Tools like savings buckets and boosters , which are features of Ally Bank’s Online Savings Account, can help you visualize your goals and save more money. Savings buckets allow you to separate your money so you can easily see what you have set aside for emergencies vs. college expenses, while boosters help you automate more savings.

Whew! That's a lot of information. However, taking a close look at your savings and prioritizing your financial goals at age 40 is a really good idea. Consider talking with a financial advisor if you still have questions about how much to save for retirement or how to make all the pieces fall into place.

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