How to save for retirement in your 40s

When you hit your 40s, retirement starts to feel like a more tangible goal, making it the perfect time to get serious about your pension. Whether you’ve been saving diligently or are just starting to think about retirement, your 40s are a powerful decade to make meaningful progress. Life may be hectic – juggling a career, family and perhaps caring for aging parents – but even small actions now can have a big impact down the road.

1) Take stock of where you are

Assess your existing pension savings

Start by gathering details on your current and previous workplace pensions, as well as any self-invested personal pensions (SIPPs) you may have. Check how much you’ve built up so far and how much you’re contributing each month.

Additionally, check your state pension forecast. This handy tool, provided by the UK government, shows how much state pension you’re on track to receive and how you can fill any gaps.

Review your other assets

Don’t forget about any other assets you hold, such as a stocks and shares individual savings account (ISA) or cash savings. These could also play a role in funding your retirement.

Check where you’re invested

Whether you have a workplace pension, a personal pension or both, the money in those pots will be invested, usually in a mix of shares and bonds¹. It’s really important to check that your investments suit your attitude to risk and goals. Investing in the stock market can help your money work harder, whereas being too cautious could mean your savings struggle to keep up with inflation². Investments go down as well as up, but in your 40s there’s still plenty of time to recover from market dips.

2) Picture your ideal retirement

Define what retirement looks like for you

It’s empowering to visualise your future. Do you dream of travelling? Are you hoping to move somewhere new? Do you see yourself supporting loved ones? The clearer your vision, the easier it is to plan for the costs involved.

Identify any gaps

Think about the lifestyle you want and compare it with your current savings. The Pensions and Lifetime Savings Association offers helpful benchmarks, which we explore in depth in this article. If there’s a gap, don’t be discouraged. Knowing what you need is the first step to closing it.

3) Make the most of your 40s

Increase your contributions – even a little bit helps

Many people reach their peak earning years in their 40s, making it an ideal time to increase your workplace pension contributions. Just a few extra percent a year can make a massive difference to your retirement.

Some employers will match or even exceed your contributions if you choose to increase your own. For example, with auto-enrolment, many employers pay in 3% of your salary and you pay in 5%³, but if you increase your contributions to, say, 7% they might also pay in 7%. On a salary of £50,000, this could result in an extra £3,000 a year going into your pension, according to our calculations.

Open a SIPP and maximise tax relief

If you’re self-employed or your employer only offers the minimum auto-enrolment contribution, saving into a SIPP can help you fill any gaps. You could also use your SIPP to save bonuses, inheritance or income from freelance work. Bear in mind that fees across SIPPs vary, so it’s important to review the charges before opening an account.

The more you pay into your pension, the more you can take advantage of tax relief. For every £80 you contribute, you get another £20 added by the government. If you’re a higher-rate or additional-rate taxpayer, you can claim an additional £20 and £25, respectively, through your tax return. The maximum amount you can pay into a pension and still get tax relief is the lower of £60,000 or 100% of your gross relevant earnings⁴.

If you run your own business, read our earlier article to discover the other perks of saving into a pension.

Consider consolidating your pensions

If you’ve changed jobs a few times during your career, you might have accumulated several pension pots. Combining your pensions can make managing your savings much simpler and it’s easier to track your progress. If you consolidate your pensions with a lower-cost provider you’ll also save on fees, helping you reach your goal more quickly. However, not all pensions are suitable for transferring. Find out what to know before starting a transfer and how to transfer your pension to Vanguard. 

Your 40s are a fantastic time to take charge of your retirement planning. No matter where you’re starting from, it’s not too late to make a difference. Small, steady steps today can lead to a more secure and fulfilling retirement tomorrow.

For more tips on how to save for retirement, check out our “Couch to a £500k pension” hub for a step-by-step plan.

¹ Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.

² Inflation is the rate of increase in prices for goods and services.

³ The auto-enrolment minimum contribution for the tax year 2025-26 is 8% of your salary between £6,420 and £50,270. The 8% comprises 5% from you (including tax relief) and 3% from your employer.

⁴ For more on what counts as ‘relevant earnings’ that can earn tax relief when used to fund a pension, see the HMRC Pensions Tax Manual. Your annual allowance might be lower than £60,000 if you have a high income or you’ve already flexibly accessed your pension pot. To work out if you have a reduced (tapered) annual allowance, see HMRC’s website. If you’ve flexibly accessed your pension, you can work out what your alternative annual allowance is here.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Eligibility to invest in a Vanguard Personal Pension depends on your individual circumstances. Please be aware that pension and tax rules may change in the future and the value of investments can go down as well as up, so you might get back less than you invested. You cannot usually access your pension savings or make any withdrawals until the age of 55, rising to the age of 57 in 2028.

If you are not sure of the suitability or appropriateness of any investment, product or service you should consult an authorised financial adviser. Please note this may incur a charge.

Any tax reliefs referred to are those available under current legislation, which may change, and their availability and value will depend on your individual circumstances. If you have questions relating to your specific tax situation, please contact your tax adviser.

Your transfer will be sent to us as cash or shares (Vanguard funds only). During the transfer period any cash will not be invested so you could miss out on any increase in the value of your investments should the market rise.

Important information

Vanguard only gives information on products and services and does not give investment advice based on individual circumstances. If you have any questions related to your investment decision or the suitability or appropriateness for you of the product(s) described, please contact your financial adviser.

This is designed for use by, and is directed only at persons resident in the UK.

The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information does not constitute legal, tax, or investment advice. You must not, therefore, rely on it when making any investment decisions.

Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

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