A financial expert says your 40s are the most important decade for retirement planning: 'Small mistakes are no longer small'

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  • Chris Hogan, a financial expert and bestselling author, says your 40s are a critical decade for retirement planning.
  • Unlike in your 20s or 30s, it's harder to recover from a self-inflicted financial mistake at that stage of life, he says. 
  • Many people earn the most money of their careers in their 40s, so it's time to ramp up savings contributions and stick to a plan, Hogan says.
  • Use Blooom to analyze your 401(k) today and see how you can grow your retirement savings »

Your 40s are the big leagues when it comes to finances. 

It's a decade when many of life's biggest milestones — career ups and downs, maintaining a home, raising a family, college planning, and more — converge. 

"I suppose that your forties could be your pressure building years," Chris Hogan, a financial expert and bestselling author, writes in his 2016 book "Retire Inspired: It's Not an Age, it's a Financial Number." And it's a balancing act.

"Retirement is not only real, but it is actually looming out there in the visible distance," Hogan writes. In this decade of life, big financial decisions like taking on a new 15- or 30-year mortgage or relocating for a new job can have an outsize impact on your long-term goals, says Hogan, who has also studied the habits, strategies, and behaviors of thousands of self-made millionaires. 

"There's no easy way to put this: This is the decade when you start to run out of time to fix your mistakes. This is when small mistakes are no longer small," he writes.

That's why Hogan warns of the "I deserve" trap, a common pitfall among 40-somethings who reward themselves with an expensive purchase that requires taking on debt or lifestyle upgrade that derails their retirement plan downstream. There's too much at stake to "lose sight of the plan and fall into stupid," Hogan writes.

"Hear me when I tell you, though, that this doesn't mean your mistakes are insurmountable. I'm just saying they are a little more formidable to overcome than they were when you were twenty or thirty years old," Hogan writes.

If you're already investing for retirement by the time you hit your peak earning years, increase your contribution rate, he says. If you're not saving yet, use a financial calculator or meet with a financial adviser, and start investing immediately.

"I always tell people that if we put retirement considerations on a medical injury scale, we would move from stable (in our twenties) to serious (in our thirties) to critical (in our forties). That's just another way of saying that your forties are really a time to get after it," Hogan says.

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