3 Things to Do in Your 40s to Retire in Your 60s

The average retirement age in the U.S. is 61, according to Motley Fool research. You may be aiming to retire a bit later in your 60s. But regardless of whether your target retirement age is 61, 63, 65, or 69, that decade of life is a popular time to retire. And if you want to be able to pull that off, here are three things you ought to do during your 40s.

1. Pay off high-interest debt

Your 40s can be a tricky time, financially speaking. You might still be grappling with some child care costs, while trying to keep up with your mortgage and save money for your kids' college.

But one thing you should really focus on doing during your 40s is paying off credit card balances. That's because carrying a balance on a credit card could cost you a lot of money in interest. So if you shed that debt, instead of paying interest to a credit card company, you can put more money into your IRA or 401(k).

2. Maintain a solid emergency fund

It's important to have money in savings in case unplanned bills pop up. If you don't maintain a solid emergency fund, you might end up having to take on costly debt that eats up money that could otherwise go into your retirement plan.

At the very least, aim for an emergency fund that can cover three months of essential expenses. This could potentially get you through a period of unemployment without having to resort to running up a credit card balance.

3. Make sure you're investing your savings aggressively

You probably know that the money in your IRA or 401(k) shouldn't just sit in cash. But you may be nervous to put it into stocks for fear of taking losses during periods of market volatility.

The thing is, though, if you're in your 40s, you might have a good 20 years until retirement arrives. And that offers plenty of time for your brokerage account to ride out the market's ups and downs. Plus, if you don't get aggressive in your portfolio and stick to more stable investments, like bonds, your savings may not grow as much as you'd like them to, leaving you with a lot less money down the line.

Over the past 50 years, the stock market's average annual return has been 10%. So let's say you're 41 years old with the goal of retiring at 61, and you have $80,000 saved for retirement so far. Let's also assume you're able to save another $500 a month over the next 20 years. If your portfolio delivers a yearly 10% return, you'll end up with a nest egg worth about $882,000. If you play it safe and score just a 5% return, you'll be looking at about $411,000 instead.

Making the right moves in your 40s could help your retirement plans go off without a hitch. Shed costly debt, maintain emergency savings, and invest aggressively so you're able to retire in your 60s -- or at an age you're happy with.