The Fresh Start Retirement Reset: Rebuilding Your 401k and IRA After Financial Setback in Your 40s

the fresh start 40s retire reset how to build your 401k and IRA from having lost it all in your 40s. i have done this for myself and many clients, and now i will show you how to do this in your 40s with good ways that actually work. why your 40s are a good time to restart your retirement why your 40s are the best time to restart your retirement why i will never forget what i did with lisa who was a marketing lead that came to me just destroyed after she lost most of her wealth in a divorce when she was 38. she said to me at our first talk ”sarah i feel like i have to start again. but here is what i told her and what i tell all clients like her who are at a point of no return in their 40s your 40s is one of the best moments for your money to turn around think this way you have 20 25 years until retirement plenty of time for compound interest to help you and you are smarter you now learn from your mistakes, you know what you spend money on, and you probably make more money than you did 10 years ago or 20 years ago. lisa who is a marketing lead is now 45 and her retirement is already back up to over 180k. yes, it is very doable. how bad is the damage and how to recover what state are you in after a financial setback i have seen clients that were bankrupt, divorced, lost their job, and had huge medical bills that they had to use their 401k to pay off. it is not easy to know where you are at right now but i need you to be real with yourself. your situation may be worse than others, or better than others. you may have nothing left, or a lot left you may have to start all over, or you may have some money in a 401k or in your bank to cover some of your bills these are all different situations that can affect how you build for your retirement. the first thing is to make what i call a ”financial reality check.” take out every statement you have, all the money you put in, all the money you lost, and anything that you still own or that you still get paid for this is your starting point, so you know what you are working with. you can never know where you are if you never write down what you have left. your 40s to restart your retirement what is the plan for your 40s to restart your retirement you are playing catch up, and you also have some good tools that you did not have when you were in your 20s or 30s. catch up bonus if you turn 50, you can put in 7 500 more into your 401k each year and 1 000 more in your ira each year, you cannot do this in your 30s, but you can do this in your 40s and up. higher income you are almost always making more money than 10 20 years ago, you can put that extra money toward your retirement and for as long as you are in your 40s, you should put most of your extra income on your savings. the 15 20 rule i would recommend putting aside 15 20 of your income if you are late in your career, yes, that is a lot of money to put aside, but remember you are playing catch up. your debt savings sandwich one thing that has worked really well for my clients is what i call the debt savings sandwich this is when you pay the minimum for your low interest debt and make the maximum contribution to your retirement accounts especially if you have a boss that matches what you put in that is free money you cannot afford to miss out on. how to build your 401k for a fresh start when you start a new job here is my plan for you to build your 401k: sign up the second you get a job in that company don’t wait for a new enrollment period every month that you don’t sign up is money you lose to compound interest if that plan lets you auto-increase your contributions, turn that option on. it is painless to do, and it works. i always tell people to be aggressive and put most of the money in stocks and a little less in bonds in your 40s. if you have old 401k accounts that you don’t use, put them all together so you pay less fees and you know better how you want to invest your money. actions for the early retire person the year you start you want to do the following: sign up right away don’t wait for a new enrollment period each month you wait to sign up is money you lose to compound interest find out if your plan has a plan to automatically increase your contributions every year. so this is how i tell my clients to build a good 401k when they restart their retirement: 1. sign up right away in your new job 2. turn on the auto increase option 3. put most of the money in stocks and some in bonds 4. roll over old 401k and IRA accounts that you have 5. decide if the traditional or the roth is better for you, check what taxes you are at what taxes you will be at when you retire, or check if you can do a backdoor roth or not. what if you don’t want to retire at 70+ sometimes you will want to retire early, and there are ways to do this too. here are some other accounts that are better than you think: health saving accounts: these accounts are tax free, tax free, and tax free once you turn 65 you can take money out of this account for whatever reason you want, not just for health expenses. taxable accounts: these accounts do not have restrictions on when you can take money out, you can take any money out whenever you want and that can be useful if you want to retire early, or if you are in an emergency. real estate: if you have any properties, or if you want to buy one, you will have a lot of options for income and for your future. side hustles: if you have some skill, a hobby or anything that you can sell, you should monetize that and take the extra money you make and put most of it on your savings every dollar from that can go towards your retirement. mentality and psychology for the long run i know that sometimes you may feel bad and you feel embarrassed about what you did and you think you are a failure, but let me tell you this I’ve helped many people who came to me just destroyed and their wealth was gone and they felt like failures and they told me that it was their fault, but it isn’t. here are some things i learned from helping people that lost everything and later came back: set realistic expectations you will not be able to catch up in 1 2 or 3 years and that is okay, your goal is to keep on going, not to do heroic things to fix everything really fast celebrate every small win when you reach your first 1 000 that means you are doing well, when you reach 10 000 that is even better. keep your purpose alive whatever the reason you are doing this, keep it alive in your mind and heart, every time you see that reason, your motivation should be there. your action plan for the fresh start 1 month 1: evaluation and foundation finish your financial reality check open all your accounts that you need to open for your retirement start saving automatically 2 6 months: build momentum start paying the minimum on the small debts start putting the maximum on your retirement accounts and continue to track your progress monthly year 1 and beyond: stay on track do strategy checkups every year to increase what you put on your retirement accounts consider catch up contributions when you turn 50 if you feel overwhelmed by investment options always feel free to call a pro when tax strategies get complicated when you feel that you need someone that checks on your progress and helps you achieve your goals remember that i have seen people who did this from nothing at 40s and are now retired comfortably, your setback does not define you but what you do from here does. the best time to start was yesterday, and the second best is today