How to Prepare for a Secure Retirement in Your 30s and 40s

At Peterson Wealth Advisors, we often meet with prospective clients approximately 20 years prior to retirement. For many of them, the question that drove them to set up the consultation is: “Will I have enough saved?”

That question is much easier to answer when good habits were established decades earlier. This is why we invite our clients to share this article with their children and grandchildren in their 30s and 40s, or with any prospective clients who are still in the early to mid-stages of retirement planning.

Preparing for Retirement Checklist

Your actions in your accumulation years can set the stage for a secure retirement later. Here are six key areas to focus on:

 Save Early and Consistently

In retirement planning, time is your greatest asset. Money saved in your 30s and 40s has decades to grow and compound. Even modest contributions today can make a big difference in the long run.

If your employer offers a 401(k) or similar plan, contribute enough to capture the full company match—otherwise you’re leaving free money on the table. When possible, increase your contributions over time until you’re maxing out what you can reasonably afford. 

This is what we often refer to as the “art of accumulation.” Building wealth for retirement isn’t about hitting home runs — it’s about steady contributions and letting compounding interest work for you. (See our article on Are You Ready for a 30-Year Retirement?)

Use Retirement Accounts to Your Advantage

Tax-advantaged accounts like 401(k)s, IRAs, and even Health Savings Accounts (HSAs) can help accelerate retirement savings:

• 401(k)/403(b): Automatic contributions from your paycheck make saving effortless. Over time, gradually raise your percentage contributions when you get raises or bonuses.
• IRAs: If eligible, a Roth IRA as a supplementary source of saving is especially powerful in your 30s and 40s because your contributions grow tax-free for decades and withdrawals in retirement won’t be taxed.
• HSAs: If you’re in a high-deductible health plan, consider using an HSA not just for medical expenses but as an additional retirement savings tool.

We regularly help clients in their 50s and 60s restructure these accounts for income. But the best results come when saving starts early. For more, see our post on Year-End Financial Planning: What to Do Before December 31st.

Invest for Growth, Stay the Course

With decades until retirement, growth should be your primary investment goal. That usually means a healthy allocation to stocks. While stocks are more volatile than bonds or cash, they’ve historically outpaced inflation and provided the returns needed for wealth building.

We generally recommend shifting gradually from stocks to bonds as you approach retirement. This helps reduce risk while still giving your money a chance to grow. 

At retirement: Aim for about 60% stocks / 40% bonds.

Five years before retirement: Step down to roughly 70% stocks / 30% bonds.

Ten years before retirement: Step down again to around 80% stocks / 20% bonds.

More than ten years out: You can be anywhere from 90% stocks / 10% bonds to nearly all equities, depending on your risk tolerance and goals.

The general pattern is: For each 5-year increment as you approach retirement, move about 10% out of stocks and into conservative investments.

We’ve written before about the dangers of trying to time the market. The truth is, the market cannot be reliably timed. Those who stick with a diversified, long-term strategy almost always fare better than those who jump in and out based on current events. In 2020, for example, the COVID downturn spooked many investors. Those who pulled out of the market missed the rebound, while those who stayed invested saw their portfolios recover. 

As we tell clients: focus on the long game, not the daily noise. (See our article on Investing Lessons Learned from 2020).

Avoid Lifestyle Inflation and Manage Debt

Your 30s and 40s are often prime earning years, but they’re also years of increasing expenses: homes, kids, cars, and more. It’s easy to let your spending rise with your income, a trap known as lifestyle inflation.

The key is to live below your means. Use pay increases as opportunities to boost your savings rate, not just your spending. Just last week, a client told us that his most invaluable piece of advice for a younger investor is to begin contributing 10% of your salary to savings at the beginning of your career, and continually increase that percentage each time you get a raise. 

At the same time, minimize high-interest debt. A mortgage or student loan may be manageable, but credit card balances and other high-rate loans can quickly erode your financial progress. 

Remember: compound interest works for you when you’re investing, but against you when you’re paying 18% on credit card debt.

Protect Your Financial Foundation

We’ve seen firsthand that even the best-laid retirement plans can be derailed by unexpected events. Protect your progress by:

• Maintaining an emergency fund of 3-6 months’ expenses.
• Carrying adequate insurance: health, auto, homeowners/renters, and life insurance if your family depends on your income.
• Reviewing disability coverage to ensure you could still meet obligations if you couldn’t work.

Insurance and emergency savings may not feel as exciting as investing, but they form the safety net that keeps your retirement plan on track. (Though written for retirees, some of the principles from our related blog The Role an Emergency Fund Plays for Retirees can apply). 

Set a Financial Goal and Track Your Progress

It’s hard to know if you’re on pace for retirement if you haven’t defined what “enough” looks like. A common benchmark is the “25x rule”: save about 25 times your desired annual retirement income.

This isn’t a perfect formula, but it’s a good starting point. We often work with clients in their 50s and 60s to refine these numbers into a detailed income plan. The earlier you set a target, the easier it is to measure your progress and adjust.

For ideas on building your long-term plan, watch this video on the Perennial Income Model and understand how it may work for you.

Why is it Important to Start Saving for Retirement Early?

If you’re in your accumulation years, the message is simple: the choices you make today matter. Saving early, investing for growth, avoiding debt, and protecting your financial foundation will pay dividends for decades to come.

If you’re a retiree reading this, consider sharing it with your children or grandchildren. Helping them establish good habits now may be one of the greatest gifts you can give.

Peterson Wealth Advisors can Help Craft a Lasting Income Plan

At Peterson Wealth Advisors, we specialize in helping retirees create secure, lasting income plans. That being said, we also believe financial confidence starts decades before retirement.

If you or your children want to understand whether you’re on the right track, we’re here to help. Our team can review your current savings, provide a clear projection, and offer strategies to strengthen your plan.

Contact us today to start building a future that you and your family can count on.