I’m 40 and I Haven’t Started Saving for Retirement — a CFP Explains the First Steps I Should Take
Written by
Cara Danielle Brown
Edited by
Rebekah Evans
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Forty-year-old, dramatic actor, Nicholas Logan, recently wrapped a play Off Broadway to critical acclaim. Having spent a lifetime pursuing his passion, there’s nowhere else he’d rather be. Yet, while things seem to be going to plan artistically, Logan’s financial reality remains complicated. Particularly the topic of retirement — for which he has not begun saving. We asked a CFP what first steps Logan should take — here’s what they said.
Why Hasn’t Logan Started Saving for Retirement?
“As an actor, I book various, low-paying, theatre gigs and never know where my next paycheck is coming from,” Logan explained. He picks up additional freelance gigs like background work and car shows in order to pay the bills. “I just about break even each month after my expenses are paid, there’s not that much left over. Plus, I’ve never worked at a company that offered a 401(k) and I never had any kind of education that taught me how to manage money, let alone plan for retirement — which, as a performer, seems criminal.” While Logan is frugal and has managed to squirrel away $40,000 in savings over the years, he is still paying off $20,000 in student debt from his time at NYU and desperately clinging to his extra funds in the event of any unexpected emergencies.
A CFP Weighs In
So how can Logan begin saving for retirement amidst his financially strapped situation? Andrew Latham, certified financial planner (CFP) and content director at SuperMoney.com, offered some initial steps Logan can take.
Don’t Panic
While it’s important to take action, Latham encouraged Logan to not panic. “A lot of people reach 40 having never been taught how to manage money, especially if they’ve spent years juggling creative work, gig jobs or freelance income where 401(k) [plans] don’t exist,” Latham said. Since that’s the reality of many independent contractors, Logan is not behind because he did anything wrong — he was simply never given the proper tools.
Get Clear on Your Financial Picture
Next, Logan needs to get a clear picture of his finances. To do this, Latham suggested making a list of what he owns, what he has saved and what he owes. Based on Logan’s own testimonial, Lathan can see he has saved $40,000 and owes $20,000 in debt.
Create an Emergency Fund
Latham advised allocating a portion of Logan’s $40,000 savings strictly for his emergency fund — typically three to six months’ worth of expenses. Since Logan considers all of his savings an emergency fund, he is likely covered. He may consider putting the difference in a retirement or investment fund — but only if that’s feasible.
Open an IRA or Roth IRA
Since employer plans haven’t been available to Logan, Latham advised opening an IRA or Roth IRA and to begin contributing whatever amount feels realistic. “If 10% of your income isn’t doable right now, start smaller. Even $50 or $100 a month is absolutely fine and can be increased over time,” Latham said, emphasizing that what matters most is building the habit. “Even modest, consistent contributions can compound meaningfully.”
Eliminate Debt
Latham advised paying off debt while prioritizing high-interest debt like credit cards charging 20% interest — which “is like earning a 20% risk-free return, which beats almost any investment available.” In terms of student debt, Latham claimed the strategy depends on the kind of loans Logan carries. If they are low-interest, federal loans, “it may make sense to pay the minimum while you build savings and invest. If they’re private or high-interest, look into refinancing or accelerating payment.”
Ride the Momentum
Even though Logan’s gig work can be unpredictable, Latham believes he still has time to catch up. At age 40, Logan has lived enough life to know his patterns and he still has enough time to take advantage of compounding.
“This isn’t about perfection or catching up overnight,” Latham added. “It’s about building consistency, making smart decisions with the dollars you do have and creating momentum. Plenty of people start saving seriously in their 40’s and still retire comfortably.”
Editor’s note: To preserve anonymity, Nicholas Logan is a pseudonym. Since Latham has never met Logan, the above should not be considered financial advice.
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