Retirement can start to feel closer when you’re in your 40s. The good news is, there’s still plenty of time to make decisions that could have a positive impact on your future financial wellbeing.

Key points:

  • On average, couples need around $63,000 a year to live comfortably in retirement1
  • Thanks to the pandemic, many of us spend some time working from home. Channel your work commute savings into your investments. 
  • There are numerous strategies to reduce your debts. Some are easier than you might think.
  • Start early when it comes to giving your kids a healthy understanding of money.
  • Did you know that many superannuation funds have  life insurance included?

Let’s start with the good news: studies1 show that your income peaks between the ages of 45 and 54. You’ll potentially be earning more money than ever – but you may also have unexpected or unwelcome expenses, like divorce2. At this age you might also put retirement planning on the backburner in favour of more pressing financial commitments, such as your home loan and kids’ school fees. Use these potential life changes as the impetus to re-evaluate your assets and income and look at how you can maximise savings for your retirement.

In your 40s, retirement age is still at least 20 years away and, while that seems like plenty of time, your decisions now can help secure your financial future. Read on to find out how to save for retirement that favours quality of life in your 40s.


Calculate how much you’ll need for retirement

Keep tabs on how much you’re likely to need in retirement by checking the retirement standards published quarterly by the Association of Superannuation Funds of Australia (ASFA)2Calculate this against your own super balance to give you an idea of how soon you’ll be able to say goodbye to the 9 to 5.

According to the Association of Superannuation Funds of Australia, by the time you reach 49 you’ll have between around $80,303 and $165,5873 in your super account. The same group estimates healthy singles who own their own home will need retirement savings of $44,818 per year for a comfortable retirement, while couples will need combined retirement savings of $63,352 per year of retirement. Are you on track to getting there in the next couple of decades?

Set realistic financial goals

While your financial goals in your 20s and 30s may have been idealistic, as you get closer to retirement, they should become realistic. It’s time to develop a clear plan for your savings, with achievable short-, mid- and long-term targets working toward your overall retirement goal.

Live within your means

Your 40s are typically peak earning years, but with the COVID pandemic on our doorstep, many things aren’t typical right now. One thing that’s changed is where we do our work. Today at least 41% of Australians work from home at least one day per week, and many people are yet to go back to the workplace4. While there might have been some initial expenses to set up a suitable home workspace, there’s also a reduction in day-to-day costs like commuting. Consider funnelling any of this cash into your savings instead, to actively save for your retirement.

Become more mindful around spending on big-ticket items as well – before a splurge, try taking a day (or a week) to give yourself time to think about how much you really need the item. You’ll be surprised at how often you decide it’s not essential to your life, and the money you save can be added to your retirement savings instead.

Review your investments

Your super might be ticking along, but what about other investments? It’s not too late to start saving and investing. Work out what style of investor you are so you have a better understanding of how comfortable you are with risk. Then talk to a financial adviser about creating a portfolio that suits you, which might include property, shares and other investment classes.

Aim to be debt free

Entering retirement with debt means juggling repayments with a high interest rate, which will eat into your retirement income.

To enter retirement debt free, look at paying off your home loan before you retire. Preparing for retirement in your 40s might mean getting a better deal on interest rates or creating a budget that allows you to make extra contributions to your home loan, above your minimum monthly repayments.

Make sure you pay off your credit card balance in full each month so you don’t accumulate interest. Be cautious about borrowing money that you won’t be able to pay off in a short period of time.

TIP 1: Not all debts are the same. It’s a good idea to understand which are ‘good’ and which are ‘bad’, and which you should be paying off first.

TIP 2: Do you have an emergency fund in place? Here’s why you need one, and how to build one – fast.

Update your insurance

Whether there’s an unexpected emergency or you suffer an ongoing illness, having the right kind of insurance can help create peace of mind when you need it most.

Review your private health insurance to make sure it’s still right for your needs, particularly if your circumstances have changed or you have a growing family. Income protection and life insurance help to protect you and your family if you can’t work due to injury or illness, so you can continue to pay the bills without dipping into your savings.

Plan for your kids’ futures

Your kids mean the world to you – we get it. But their education doesn’t have to  come at the expense of your retirement. As part of your retirement planning, consider setting up a separate savings account to fund things like your kids’ education fees, so you don’t have to dip into your retirement fund.

Show your children how and why you’re cutting back on discretionary spending (meals out, trips to the movies) to make their long-term goals (like getting a job) a priority. They’re never too young to develop a healthy understanding of finances and budgeting.



1 Association of Retirement Funds of Australia (2019): ASFA Retirement Standard
2 Association of Superannuation Funds of Australia: ASFA Retirement Standard
3Association of Superannuation Funds of Australia (2019): ASFA Retirement Standard
4 Australian Bureau of Statistics (2021): A year of COVID-19 and Australians work from home more

3 steps for getting serious about retirement in your 40s

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1
Calculate your retirement savings goals

Find out how much you’ll need for a comfortable retirement and then create a savings plan to help you achieve a debt free retirement so you don’t have to work longer than you want.

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2
Live within your means

Understand where your money goes, maximise your current income and review investments. 

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3
Plan for your kids’ financial wellbeing

Lead by example and teach your children
to start saving and investing for long-term goals. Help kids create a simple budget that they can adjust as they get older.

Speak to a super coach

If you’re an AMP Super member and would like to know more about your super, book a complimentary 20-minute super coaching session.

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Important information

Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature. It hasn’t taken your financial or personal circumstances into account.

The super health check is provided by AWM Services and is a general advice conversation only. It does not consider your personal circumstances.

It’s important to consider your particular circumstances and read the relevant product disclosure statement, Target Market Determination and terms and conditions, available from AMP at amp.com.au, or by calling 131 267, before deciding what’s right for you. The super coaching session is a super health check and is provided by AWM Services and is general advice only. It does not consider your personal circumstances.

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