I'm 40 With $40,000 in Retirement Savings. Am I Doing All Right?

Social media has turned a lot of us into more curious versions of ourselves. With people posting so much information about themselves online, it's easy enough to determine where your neighbor went out to dinner last night or what car your old college roommate decided to upgrade to.

But one thing people don't tend to post about is the amount of money they have saved for retirement. Clearly, that's just a no from a social media standpoint. And also, some people might be embarrassed by how little long-term savings they have.

If you're 40 years old, it means you probably still have more working years ahead of you than behind you. But you may be wondering how well you're doing on the retirement savings front if you have $40,000 tucked away in your IRA or 401(k). And while there's data that could give you an answer, you should know that the steps you take in the coming years could play more of a role in determining what sort of nest egg you ultimately retire with.

How the average 40-something is doing

Data from Northwestern Mutual finds that the average person in their 40s has $77,400 saved for retirement. So at first glance, with a $40,000 balance, you might assume you're way behind.

However, it's worth noting that the aforementioned data breaks down savings balances by decade, not specific age. Someone who's 48 years old, for example, has had an extra eight years to save and invest. So it's not necessarily fair to compare your balance to the balance of someone almost a decade your senior.

But let's say it is the case that the typical 40-year-old has a lot more retirement savings than you. That's not something to feel bad about automatically.

Maybe you had more financial challenges to overcome than other people did. Maybe you had to pay for college completely on your own. Maybe you had children at a young age and have been paying for their care ever since.

Rather than bemoan the fact that your savings balance may be smaller than that of the typical person your age, instead, recognize that $40,000 is a great start. And if you pledge to build on that balance going forward, you might still end up with a sizable nest egg by the time retirement arrives.

Keep on saving and investing

While $40,000 is a good start on the road to building a nest egg, you probably want to retire with a lot more money than that. But it may be more than possible if you commit to saving and investing in a brokerage account consistently for the remainder of your career.

Let's say you're able to save $400 a month between now and age 65, and that your IRA or 401(k) delivers an average annual 10% return, which is consistent with the stock market's average over the past 50 years. When we add that to your initial $40,000 balance, you're looking at a total of $905,000. That's not shabby at all.

In fact, it might help you to know that in the aforementioned survey, the average person in their 60s had a retirement savings balance of $112,500. So if you're able to accumulate $905,000, you'll be way ahead of the game.

That said, rather than focusing on how your savings balance compares to other people's, a better bet is to focus on yourself. There will always be people in your life who have more money than you do. The key is to spend your energy doing the best you can for your own future, and worry less about how your balance stacks up broadly.