How Much Waiting Until 40 To Invest Could Cost You in Retirement
Starting to invest at age 40 gives your money less time to grow than starting at age 25. But that doesn’t mean you’ve missed your chance to build meaningful retirement savings.
The difference can be striking, though actual results will depend on returns, fees and how consistently you invest. Here’s what the numbers show and what later starters can do now.
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How Much Starting at 40 Could Change Your Retirement Savings
David Kassir, managing director of private wealth management at Manna Wealth Management, used a simple example to show how much time matters.
Investing $300 a month from age 25 to 65 at a 7% annual return, compounded monthly, could grow to roughly $787,000. Start at 40 and invest the same amount through 65, and you’d land at about $243,000. Those estimates assume contributions are made at the end of each month and ignore fees, taxes and inflation.
The 25-year-old contributes $144,000, while the 40-year-old contributes $90,000, yet the ending balances differ by roughly $544,000.
“The gap is not effort. It is time,” he said.
Of course, these are hypothetical projections, not guaranteed results. As the SEC notes, investing does not have a set rate of return.
What These Retirement Calculations Leave Out
The example assumes a steady return, but actual markets rise and fall, and fees can reduce investment returns over time.
Kassir noted that the estimates depend upon consistent contributions, inflation and market returns. The truth is that “real markets lurch up and down.” However, one thing is clear, the longer the timeframe, the more those investments can compound.
How To Start Investing at 40 Without Taking Excessive Risk
A shorter runway can make investing feel urgent, and that urgency is when people start chasing risky bets. Kassir warned against exactly that.
Instead, he suggested saving more, claiming the full employer match if it’s offered, boosting contributions after raises and staying diversified. Diversification can help reduce portfolio risk, though it can’t prevent losses.
Trevor Houston, a financial advisor and CEO at ClearPath Wealth Strategies, also recommended looking at the whole 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.
Use Employer Matches and Catch-Up Contributions
An employer match is a great way to build up retirement savings, because it’s “free money,” said Michael Schramm, a chartered financial analyst (CFA) and author of the forthcoming book “Emotional Finance.”
Eligible workers may also qualify for catch-up contributions, depending on age, plan rules and other criteria. Tax-advantaged accounts can offer benefits depending on account type and your situation.
For 2026, the 401(k) contribution limit is $24,500, according to the IRS. Workers 50 and older can contribute an extra $8,000, and those ages 60 to 63 may qualify for a higher $11,250 catch-up limit.
The 2026 IRA limit is $7,500, with an additional $1,100 catch-up for people 50 and older.
Don’t Let Regret Keep You From Starting
Starting earlier would have been ideal, but starting now still beats waiting.
“Your starting point does not have to dictate your endpoint,” Houston said. Choose a contribution you can sustain, automate it if possible and revisit your plan as your income or circumstances change.
Starting at 40 may mean you have less time to save, but steady contributions and a plan you can stick with can still help you build toward retirement.
Editor’s note: Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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