I'm in my mid-40s with zero retirement savings — is it too late to catch up? Here are 5 simple steps you need to take now

1. Know your goal

Just as you can't plan a road trip unless you know the destination, you can't create a retirement strategy unless you know your end goal. The first step to getting your retirement savings on track in your 40s is to set a clear target. How much money do you need to retire?

This seemingly daunting question isn’t hard to answer thanks to the abundance of free online retirement calculators.

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2. Consider redefining "retirement"

After crunching some numbers, you may find that your original vision for retirement isn't as feasible as you'd hoped. Maybe you dreamt of living on a cushy $100,000 a year but realize that at age 45 with zero savings, you'd likely need to save thousands of dollars a month to have enough to retire at age 67 and live a similar lifestyle. This doesn't mean a comfy retirement is off the table for you, but you may need to adjust your expectations and separate wants from needs.

If saving as much as you originally envisioned isn't possible, you can make a few simple adjustments. For instance, you could plan to retire later, which would give you more time to bulk up your savings and receive higher Social Security benefits. You could also reduce the cost of your retirement lifestyle so you won't need quite so much money saved. Or, consider ways to continue earning even in retirement.

3. Cut expenses

There are two ways to increase the amount of money you can save for retirement: either reduce how much you spend or increase how much you earn — or ideally, both. Since your income is harder to control than spending, reducing your current expenses is a good place to start.

Housing accounted for the largest expenditure among Americans in 2022, according to the Bureau of Labor Statistics. This can be a hard expenditure to reduce, especially if moving to a smaller place in your 40s just isn’t feasible. The next largest expenses were transportation and food, both of which you can more easily adjust on a daily basis. For example, see if you can take public transit or bike to work. You could also prepare more meals at home and use the leftovers for work lunches.

While saving money on gas and food may seem like a drop in the bucket, every dollar counts when saving for retirement. Just $100 per month invested for the next 20 years at an average annual return of 7% could grow into almost $53,000. It’s not enough to retire on but it will get you that much closer. And if you continue to cut expenses while you increase your income, you'll save even more.

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4. Increase your income

Your income marks the second factor in the savings equation. The more you earn, the more you can save. It isn't always easy to increase your income, especially when you have an employer who sets your salary. But there are ways to work around this such as getting a second job.

According to the Bureau of Labor Statistics, 5% of Americans between the ages of 25 and 54 had more than one job in 2022, a slight increase from 4.8% the previous year.

The important point to remember is that anytime you get extra earnings — whether from a second job or work bonus — put the money directly toward your retirement. It's far too easy to let lifestyle creep cause your expenses to rise with your income, and let it leave you right where you started.

5. Invest as aggressively as you can tolerate

Saving money alone won’t guarantee you’ll reach your retirement goals. Savings account rates often trail inflation, which means every dollar in your savings account actually loses value each day. To maximize your savings, it may be best to invest.

Stocks are more volatile than safer investments such as bonds, but they also boast higher average returns. Historical data compiled by the NYU Stern School of Business shows thathe the S&P 500 returned almost 9.6% per year on average between 2002 and 2022. Meanwhile, medium-grade corporate bonds returned less than 6.6% during that same time period and U.S. Treasury Bonds returned less than 3.7%.

The caveat here is that you should only invest as aggressively as you can stomach. Consider a “buy and hold” strategy. Remember, the market fluctuates frequently. If you sell investments anytime they decline by small amounts, you may end up doing more harm than good in the long term. Understand your risk tolerance and invest in a way that potentially has a high rate of return but still lets you sleep at night.