No savings at 40? Here’s how I’d start building wealth for my retirement

first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares It isn’t unusual to have no savings at 40, and it may become even more common in future. People are under a lot of financial pressure right now, and building wealth for retirement may seem a relatively low priority.Retirement seems a long way off when you are young, but it comes round soon enough. An important first step is to confirm whether you really have anything set aside for the future or not. Many people will have some long-term savings at this age, courtesy of a workplace pension or two. So I’d start by rounding them all up. If I’d lost track of any schemes, I would try to find them through the Pension Tracing Service.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Time for actionThe next thing I would do is work out how much I ought to be saving each month. Some people make the mistake of spending what they want, then saving what’s left. Personally, I would turn this around by saving what I needed, then spending what’s left.With absolutely no savings at 40, I’d need to pull the stops out to make up lost ground. A few pounds a week wouldn’t do it. I’d be looking to save 20% of my salary. If I fell short of that target, I’d dig up my recent current account statements and look for ways to cut back on my spending, or dream up ways of generating extra income.Let’s say I saved the modest sum (in pension terms) of £100 a month. If I stuck with it, by age 66, I would have £88,160. This assumes I invested my money in the FTSE 100, which has delivered a long-term total return of 7% a year. If I increased my contribution by 3% every year in that time, I could expect to have £117,189.Sadly, that isn’t enough to retire comfortably, although it won’t do any harm. So I’d be looking to invest more. Say I increased my monthly contribution to £300 with an annual 3% uplift. By 66, I would have £351,568. That’s more like it, especially if I had workplace pensions on top. Plus there is also the State Pension.No savings at 40 isn’t the end of the worldThe best way to invest depends on each person’s own circumstances – what other assets they may have, their risk tolerance, and so on. Myself, I would invest my money on the stock market, primarily in FTSE 100 and FTSE 250 shares, and some overseas investment funds. Over the longer run, this should generate a much higher return than cash. I would invest half of my money in a self-invested personal pension (SIPP), and claim tax relief on my contributions.I would invest the other half in a Stocks and Shares ISA. There is no tax relief on ISA contributions, but any money I withdraw in future will be free of income tax and capital gains tax. Together, pensions and ISAs make a tax efficient blend.With no savings at 40, taking urgent action is vital. My calculations suggest I could still enjoy my retirement. The most important thing is to get started. The next most important thing is sticking to my plan. No savings at 40? Here’s how I’d start building wealth for my retirement Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. 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