Turning 40 often comes with a mix of career momentum, growing responsibilities, and a clearer sense of your financial priorities. By this point, you’ve likely been building assets for years and may be entering a particularly impactful phase of wealth-building. With roughly 25 years left in the workforce before retirement, there’s still time to make meaningful progress—but the clock moves faster than it feels.
Your 40s are an ideal time to take stock of your finances, refine your strategy, and explore ways to grow your wealth more intentionally. From maximizing retirement accounts to leveraging career opportunities, there are multiple avenues to help strengthen your financial future. Let’s walk through a few areas to focus on as you continue building toward your goals.
Max Out Your 401(k)
Your 401(k) is one of the most powerful tools for retirement savings, and making the most of it can have a big impact on your financial future. Yet, only 14% of participants maxed out their 401(k) contributions in 2024. If you’re in that group, congratulations! You’re ahead of the curve!
For the remaining 86%, now’s a good time to consider increasing your contributions. Using your 401(k) to its full potential helps ensure you’re building a strong foundation for retirement, especially in an era when pensions are rare and Social Security may not cover everything you need.
The IRS has raised the 2025 contribution limit to $23,500 per year. Over time, consistently contributing the max, along with any employer match, can make a substantial difference. For example, a simple calculation of $23,500 compounded for 25 years with a 4% rate of return will yield nearly a million-dollar nest egg (this is not net of fees, does not include distributions, and does not count any additional gains from employer matching).
Maxing out your 401(k) isn’t just about numbers, it’s about building security and flexibility for your retirement years. Even small increases in contributions now can have a big impact decades down the line.
Beyond Your 401(k): Consider Other Investment Options
While a wonderful tool, your 401(k) isn’t the only savings vehicle in your tool belt. Another retirement account you can add to your repertoire is a Roth IRA. The 2025 limit for contributions is $7,000.
You’ve probably heard people lauding Roth IRAs forever, and that praise is not entirely unfounded. Contributions are made with after-tax dollars, so you don’t receive an immediate tax benefit, but withdrawals in retirement are tax-free. This tax incentive offers an alternative to a traditional IRA and 401(k), where contributions are pre-tax but taxes are due later.
Young people in low tax brackets may find the Roth especially appealing, since your tax rate now is likely lower than it will be in retirement.
Income Limits and Backdoor Roth IRAs
What if you make too much to contribute directly to a Roth IRA? For 2025, married couples filing jointly must earn less than $236,000 to contribute, while single filers must earn under $150,000. These limits can prevent high-earners from contributing directly, but there’s a strategy that can help: a backdoor Roth IRA, also known as a Roth conversion.
This approach allows you to roll over funds from a traditional IRA into a Roth IRA, bypassing the income restrictions. Keep in mind that backdoor Roths have tax implications, which may make them more complex than they’re worth for some investors. Working with a financial advisor can help determine if this strategy fits your overall financial plan and long-term goals.
Continue to Level Up in Your Career
Your 40s can be an important time to take a step back and evaluate your career in the context of your long-term financial goals. Whether you’ve been steadily advancing, making lateral moves, or balancing work with other priorities, it’s worth thinking about how your career can continue to support your wealth-building journey.
Look for opportunities to increase your earning potential, take on new responsibilities, or explore roles that better align with your skills and goals. This might mean asking for a raise, pursuing a promotion, or even considering a new position that offers greater growth potential.
Think about the value you bring to your role and how you can position yourself for advancement:
- Taking on additional projects or responsibilities
- Leading or mentoring others
- Delivering strong results on high-impact work
- Contributing to team initiatives or improving workplace culture
The path will look different for everyone, and that’s okay. The goal is to continue building your skills, your income, and ultimately your wealth, in a way that makes sense for your life and career.
Leverage Your Stock Options
In lieu of salary increases or additional bonuses, many modern employers offer their employees stock options as an additional form of compensation. Stocks are a great resource for your employer because they don’t require a huge influx of cash.
As an employee, stock options are a way to build wealth, add diversity to your portfolio, and give you further incentive to grow the company. Many stock options are discounted for employees, giving you the opportunity to invest at a better price than the fair market value.
Before diving in head first, be sure you fully understand how stock option plans work. This includes when the stocks vest (vesting schedule), when you can exercise them, and what tax implications you can expect. While stock options offer an array of possibilities for many investors, it’s important to know the up-front costs and tax responsibilities so you can prepare for the best time and way to use them.
Pay Off Your Debt
Debt can quietly slow down your wealth-building efforts, so taking stock of what you owe is an important step in your 40s. This includes everything from student loans, credit cards, and personal loans to auto loans and your mortgage.
Once you know what you’re carrying, you can create a repayment strategy that works for your life and goals. Tackling high-interest debt first is often the most efficient approach, but any plan that steadily reduces your balances can make a big difference over time.
After paying down debt, focus on maintaining a lifestyle that keeps you from accumulating more. Avoiding lifestyle inflation can help you stay on track and continue saving for retirement. Living intentionally within (or slightly below) your means can help you to prioritize long-term financial security while still enjoying the present.
When you do spend, make it purposeful. Aligning your spending with your goals and values helps prevent unnecessary debt and reinforces healthy financial habits that will benefit you well into retirement.
Consider Working with a Financial Advisor
There are so many strategies to consider as you build your wealth. Your 40s can be a great time to recharge and re-energize yourself and your financial strategy. The most important thing is staying true to your goals and priorities, and using money as a tool to help you get there.
Working with a financial advisor can help you take a holistic view of your finances so you can make informed decisions that align with your goals and values.
An advisor can help identify opportunities to grow your wealth, help optimize your investments, and build a comprehensive financial plan that aligns with your values and helps support your goals. They can also guide you through complex decisions, like retirement planning, tax strategies, or leveraging stock options, with clarity and confidence.
Your 40s are a time to be intentional about your financial future. With the right guidance, you can continue to expand what’s possible, feel confident in your choices, and make your money work for you.
If you’re interested in working with a financial advisor, see if Abacus is right for you.
