9 Actions You Should Take At Age 45 That Will Change Your Retirement Forever

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For Americans in their 40s, retirement might seem far enough away that they don't need to put much thought into it. However, that's not necessarily true. According to a Gallup survey, between 20% and 46% of Americans lack any meaningful savings. If this pattern continues into retirement, it means that far too many people will lack any meaningful financial resources in their later years.

There are a few reasons why this happens. For instance, it's no secret that the cost of living in the United States is rapidly rising. With groceries, housing, and utilities taking up so much of their earnings, many Americans cannot afford to set aside any meaningful savings. It could also be a combination of bad investments or wasteful spending. Whatever the reason, a startling number of Americans may have to penny-pinch their way through retirement. That is, if they can afford to retire.

As unfortunate as this outcome is, the good news is that it's avoidable if you take steps to prepare as soon as possible. Let's say you're 45 and plan to retire by or before age 65. Here are nine steps you can take that will change your path to retirement forever.

Imagine setting a goal to save $100,000 towards retirement. Some people will look at the figure and find it too daunting even to try, especially when faced with bills and the perception their current income just isn't enough. According to accredited psychotherapist Kamalyn Kaur, constantly worrying about paying bills and access to money can take a severe toll on your overall health. You may be capable of starting a small savings account, but your past beliefs and related stress about money may be preventing you from even trying. Whether you take a simple or aggressive approach to savings, the nickels and dimes will quickly turn into dollars before you know it. 

If you aren't confident in your ability to do it on your own, there are apps like Chime and Acorns that let you either save or invest your spare change automatically. There's the tried-and-true method of putting physical money into a jar or piggy bank from time to time. This may be the best place to start as it is a visual means of seeing savings grow. A similar method that has grown very popular in recent years is the 100 envelopes savings challenge, where you buy a binder in a store or on Amazon with the goal of filling it with different denominations of bills. Successfully filling the binder means saving hundreds or even thousands of dollars.

While this may be a good place to start, it's important to note that you'll only have the money you put in. Meanwhile, a savings account, especially a high-yield option, lets you earn additional funds over time.

The Commerce Institute revealed that Americans launch an average of 4.7 million businesses every year. In 2023 alone, the U.S. Census Bureau counted a record-breaking 5,481,437 new business ventures, according to the Commerce Institute. So if you have been considering starting your company before now, you'll find the urge is quite common. That said, if you worry that being in your 40s means you are now too old to create a new business, you're also not alone.

A quick Google search reveals multiple questions and discussions about whether it's possible to start a new business at age 40 or 50, and if it's too late. But as one person shared in their r/Entrepreneur post, their desire to try was in part motivated by future worries, saying, "I am especially concerned about the years to come and being able to take care of myself," and "I want a career or business that brings me a sense of fulfillment."

As it turns out, age may be in your favor. Research shows that there are twice as many successful entrepreneurs at age 50 and over as there are under 25. You'll begin from a place in your life where you have the perspective of decades of life lessons, professional experience, and education. In addition to generating income for the future, you can begin using small business resources for retirement planning.

According to Pew Research, about 54% of Americans know either a great deal or a fair amount about finances. However, the same survey revealed that 33% have some relevant knowledge, while 13% admit they lack meaningful financial awareness. Together, less than half of Americans likely know what they need to do when tasked with future retirement planning. Even so, no rule says you have to build a future towards retirement alone.

Consider partnering with a financial advisor, especially one who is knowledgeable about retirement and related planning. Start with consultations, asking questions about your specific financial concerns and your goals. Though it might be possible to get a short free consultation, some estimate that you should expect to pay between $150 and $400 per hour; a flat rate fee might range from $1,000 to $3,000. From there, aim to work with the person or firm most aligned with what you wish to achieve.

Likewise, if married, you can create an account dedicated solely to retirement savings with your spouse. That said, it may also be best to include a post-nuptial agreement or update to your wills to clarify for yourselves and family members what happens to the funds in that account in the event of a divorce or death.

You might want to put aside money for retirement, but find that your insurance payments are currently so high, it feels impossible. If that's the case, you're far from alone. Bankrate estimates that Americans currently spend an average of nearly 3.4% of their annual income on car insurance alone. As discouraging as this may feel, there's a chance that you may be overpaying. For instance, your coverage may come with hidden fees that weren't mentioned when you signed with a particular company. You may also be paying for additional services that you ultimately don't need, further driving up costs. 

A lot of the times, insurance comes down to the hypothetical. With that in mind, you may need to prioritize insurance coverage that you actually need, especially by law, over unnecessary charges added on to cover scenarios that aren't as likely to occur. It may be that you need to shop around for insurance providers with better rates than what you currently have. You might also be able to see long-term savings through bundling, that is, combining coverage for vehicles, rent, and more into one monthly payment. If you do this, remember to confirm that what you are paying by doing so is actually lower than what each type of insurance would cost separately.

One option for retirement planning is to establish a trust, in which a designated individual, or trustee, manages your assets and oversees their transfer into the trust. It need not be limited to money from checking and savings accounts; real estate can also be transferred into a trust. Creating a retirement trust can work, but it's essential to understand the associated risks.

For instance, you may be advised to transfer the entirety of your IRA into a trust. But, as Trust & Will notes, the IRS will consider this transfer 100% taxable. That means you will be responsible for the entire amount, which will be included in your yearly income tax. Your age is another factor. Withdrawing from your IRA before the age of 59 and a half will result in paying out a penalty equal to up to 10% of the total amount.

When establishing a retirement trust, be mindful of current laws and obligations and only include key assets when it is beneficial to do so.

A CNET study found that 23% of Americans spend $100 or more per month on subscriptions. Meanwhile, Bango shared study results that determined that more than half of Americans paid for a subscription they would otherwise have cancelled, but simply forgot. The phenomenon is known as "subscription creep," in which people gradually spend more on monthly or yearly memberships.

There is a very good chance you have at least one subscription you keep out of habit, but that isn't essential. By proactively finding out which services you pay money for each month, you may be able to redirect those monthly bills toward your retirement savings account. Let's say you originally paid $150 for monthly subscriptions but found a way to cut them in half. That's $50 per month, which adds up to $600 per year and $6,000 in 10 years.

Should you remain consistent, this one change could result in thousands, or even tens of thousands, of extra dollars by the time you retire. However, if you like the idea but aren't ready to say goodbye to beloved plan options, you can always do a "rolling subscription" method, where you only keep services around when you're actively using them and then cancel or pause them when they're not in use. 

If you're frustrated by the idea that the United States is too expensive and that you won't have enough to live comfortably after leaving the workforce, you could always retire abroad. There are countries where the U.S. dollar is so strong that you can afford housing, groceries, and even healthcare for far less than it costs in America. By moving to Vietnam, you could pay less than $400 per month to rent an apartment. Meanwhile, in Belize, you may be able to buy a home for less than $60,000.

If you're 45 and want to retire in a different country, some things to start on immediately would be learning different languages so that you can at least be conversationally fluent by the time you settle in your chosen country. While English is widely spoken, so are Spanish, Chinese, and French; picking up these or other languages greatly increases the number of countries where you can communicate easily during travel or when adjusting to everyday life.

Some countries offer what are known as retirement visas. These visas are pathways to long-term residency or permanent citizenship reserved for foreigners aged 55 or older. Be sure to check the qualifications, as you will often have to earn a specific level of monthly or annual earnings or meet other stipulations that affect your chances of getting the visa.

If you haven't already, it may be a good idea to buy life insurance now instead of putting it off. This type of insurance can indeed feel like something you don't have to think about until years from now. But the truth is that as you age, the cost of insurance will go up because insurers will see you as a high mortality risk. While at 45, you won't get the exact quotes as a 25-year-old, they'll likely be somewhat lower than those of a 50- or 60-year-old customer.

Taking care of this now is one less thing to worry about as you approach retirement. While term-life insurance can help cover final expenses, whole life insurance is sometimes preferred, as you can borrow from it in the event of an emergency. When determining how much life insurance to buy, some experts recommend multiplying your annual income by 10 to 12. You should also consider other factors, such as income taxes, the number of children in your household, and your total debt.

While many Americans consider life insurance a good idea, some argue it could be a poor way to save for retirement. At least, if you approach it as your only future financial strategy. It would be a good idea to approach it as one of several methods of preparing for retirement and beyond.

According to a Gallup poll, 40% of Americans do not have a retirement savings account. While 63% of adults 30 to 49 who were previously polled had contributed to a retirement savings plan such as a 401(k), 403(b), or IRA, nearly a third had not. Some factors may include not working at a job that offers a 401(k) or another retirement savings plan. There's also some ongoing concern that race and gender may serve as barriers to adequate retirement savings plans.

If at 45 you're wondering whether it's too late to start contributing to a 401(k), IRA, or some other type of retirement account, note that the IRS offers a series of instructions on how to make contributions to qualifying plans if you are age 50 and older. If you elect not to set up a retirement plan through your employer, Fidelity, Charles Schwab, and Vanguard are popular options for establishing a Roth IRA. Customers find their services affordable and offer a wide range of options.

Should you move to open a retirement savings account, there are a few mistakes you'll want to avoid so that the process is worth your time. Some experts recommend contributing as much as possible to a 401(k), regardless of whether your employer matches the amount. Also, be advised that traditional IRAs and 401(k)s can have serious tax implications once you retire.