To "start" saving for retirement at 40, you're playing catch-up, but the good news is that you still have time to develop a plan and execute it...the key word being "execute." It's going to take discipline on your part, and you'll have to learn to pay yourself first.
One of the first questions I'll ask is about your debt-load...how much debt are you carrying? Priority number one is paying off your highest-interest debt first, and subsequently paying off the rest of your debt in order of highest interest rates (that interest you pay will KILL your retirement).
Assuming no debt, if you don't already have a liquid emergency fund established, this should be priority number two (I like between 9 to 12 months' worth of living expenses). And it becomes much easier to get to the 9-12 months' worth mark once you roll the dollars you had going toward debt into your emergency fund. For this money, I like money market accounts, as they pay you a slightly higher interest rate than a typical savings account.
Once your debt is paid off and you have an emergency fund established, only then should you start to invest for retirement. Take the money you had going toward debt and toward building your emergency fund and put it to work for you. Assuming at least 20 to 30 more years of work, you have plenty of time to accumulate a nice retirement WITHOUT exposing your money to risk. In your 40's, like Paul stated, you cannot afford to lose money in the market, especially when there are safe-money strategies that will allow for a reasonable rate of return, typically 4% to 8%, with ZERO risk of losing principal. If you haven;t read Patrick Kelly's book "The Retirement Miracle" I suggest you do, and incorporate that as one of your strategies.
I love the Roth IRA, but depending on how much you make (unless you're a Federal Employee), the maximum contribution allowed is rather limiting. I also love the idea of establishing a home-based business, not only for the tax savings, but also to establish a SEP if the company you work for doesn't offer a retirement plan. But if you can learn to live below your means and adjust your budget to do so, saving 15% to 20% of your annual salary will allow you to catch up rather quickly. If you can do more, than do more.
I'd be happy to answer any questions you might have throughout the process...just reach out.
www.TZGFinancial.com | 04.02.16 @ 16:15