The Critical Decade
Your 40s are the pivot point for retirement planning. You're far enough along to have accumulated something, but you still have 20+ years of earning ahead.
This is when most people either get serious about retirement—or realize they need to.
The Math of Starting at 40
If you start saving seriously at 40 with 25 years until retirement at 65:
Monthly savings of €500 (at 6% return):
- Final value: ~€350,000
Monthly savings of €1,000:
- Final value: ~€700,000
Monthly savings of €1,500:
- Final value: ~€1,050,000
The numbers are achievable—but they require commitment.
Where You Should Be at 40
Traditional benchmarks suggest 3x your annual salary by 40. More practically:
- Minimum: €100,000-€150,000 in retirement accounts
- On track: €200,000-€300,000
- Ahead: €400,000+
But remember: what matters is your expenses, not your income.
The Catch-Up Strategies
1. Maximize Pension Tax Relief
In Ireland, you can claim tax relief on pension contributions based on age:
- Under 30: 15% of income
- 30-39: 20% of income
- 40-49: 25% of income
- 50-54: 30% of income
- 55-59: 35% of income
- 60+: 40% of income
At 40-49, you can contribute 25% of your income with tax relief. On a €60,000 salary, that's €15,000/year—and €6,000+ in tax savings.
2. Lifestyle Creep Check
Your 40s often bring higher income. The question: where's it going?
Common lifestyle creep traps:
- Bigger house (bigger mortgage)
- Private school fees
- New cars every 3-4 years
- Holiday upgrades
Every €500/month in lifestyle creep is €175,000 less at retirement.
3. Clear High-Interest Debt
Credit cards at 20%+ APR are retirement killers. Pay these off before increasing pension contributions beyond employer match.
4. Review Your Investment Mix
At 40, you have 25+ years until retirement. You can still afford to:
- Hold higher equity allocations (70-80%)
- Weather market volatility
- Benefit from long-term compound growth
Being too conservative now means missing growth when you need it most.
The Mortgage Question
Should you pay off your mortgage early or invest more?
Pay off the mortgage if:
- Your mortgage rate is high (4%+)
- You value the certainty of being debt-free
- You struggle to invest while having debt
Invest more if:
- Your mortgage rate is low (2-3%)
- You're comfortable with debt
- You want to maximize compound growth
There's no wrong answer—but you need to choose one and commit.
We've written a deep dive on this: Should You Be Mortgage-Free Before Retirement?
Wondering if you're on track? See Am I On Track for Retirement? for savings benchmarks by age.
Your 40s Checklist
- Know your current net worth
- Calculate your FIRE number
- Maximize pension tax relief
- Clear high-interest debt
- Check your investment allocation
- Create a written plan
- Track progress quarterly
The Bottom Line
Your 40s are not too late. They're the decade when:
- Compound interest really starts working
- Income typically peaks
- Children become less expensive
- Focus shifts from accumulation to optimization
Start now. Track your progress. Adjust as needed.
Want to see your personalized timeline? Take our free quiz and find out when you can retire.