How to Invest for Retirement When You're 40

Investing for retirement at age 40 is different from investing in your 20s and 30s. Since there are fewer years until retirement -- say, 25 as opposed to 45 -- you must lower the degree of risk, focusing less on emerging markets and start-up companies and more on blue-chip stocks, bonds and other more conservative securities. Putting thought into estate planning and retirement-age taxation is also a good idea, even if you need to recruit professional help.

Put the maximum into your 401(k). The yearly limit as of 2013 is $17,500, and when you reach 50, you'll be entitled to make an additional catch-up contribution ($5,500 per year as of 2012). If your employer matches your contributions, even to a limit of 25 percent, you'll get free money for retirement savings.

Max out your IRA. The limit as of 2013 is $5,500 per year. You may not be able to deduct your contributions if you participate in a plan at work. In addition, you may not be able to open a Roth if your income is too high. However, you can always open a traditional IRA and roll it into a Roth later.

Invest outside of retirement plans. Stocks, bonds and mutual funds are all appropriate choices, but beware: Outside of a retirement plan, cashing out securities can result in greater tax liability. Consulting a tax or financial professional can help you identify and sort out financial issues and develop a solid investment plan for your future.

Reallocate existing holdings. In addition to reducing the proportion of high-risk securities, you might want to shift the ratio of stocks to bonds, choosing at most an 80-20, or even a 60-40 stock-to-bond mix. The idea is to begin to focus more on maintenance than extraordinary growth.