For many Canadians, the 40s are the peak earning years and the last decade with a long runway to retirement. Children’s costs are often at their highest, parents may start to need help, and retirement is now close enough to put numbers on. This guide sets out the priorities of the decade and links to the pages that cover each in full. It follows the financial guide for your 30s and comes before the financial guide for your 50s, all part of life stages and life events.
Where you stand
Rules of thumb for savings by age are covered, with their limits, in how much you should have saved by 40, and typical balances in average RRSP balance by age. Being behind in your 40s still leaves time: higher contributions, using unused RRSP room, and working a few years longer all close part of a gap. A retirement calculator shows how much each one moves the result.
RRSP catch-up
RRSP room you didn’t use in earlier years carries forward, and the deduction is worth the most in the years your marginal tax rate is highest, which for many people is their 40s and 50s. A bonus or raise contributed as a lump sum can use that room; your available room is on your notice of assessment. How much a contribution saves at your income is shown by the RRSP calculator.
The TFSA keeps adding room each year ($7,000 for 2026), and someone who has been eligible since 2009 has $109,000 of total room. Which holdings suit which account is covered in asset allocation by age.
The mortgage vs investing question
Extra cash can go against the mortgage (interest saved at the mortgage rate, which is certain on a fixed rate but not on a variable one) or into investments (an uncertain return that may be higher). The answer depends on the rate, your tax situation, unused RRSP and TFSA room and how much risk you can carry; the trade-offs are set out in should I pay off my mortgage or invest, and planning to be mortgage-free by retirement in mortgage and retirement planning.
Children: RESPs and teenage costs
As children approach post-secondary school, it’s worth checking whether the RESP will cover the plan, and whether any missed grant years can still be caught up; the RESP guide explains the catch-up rules. Teenage costs (activities, a first car on the family insurance, tuition) rise before the RESP pays out; what children cost overall is in the cost of raising a child.
Aging parents
Many people in their 40s start helping parents: understanding their finances, making sure they have a will and powers of attorney, researching care options, and sometimes reducing work hours. What care costs is covered in long-term care costs in Canada.
Insurance review
| Insurance | What to check |
|---|---|
| Life | Whether the amount still matches the mortgage and dependants; the need often falls as the mortgage shrinks and savings grow. Policy types are compared in term vs whole vs universal life insurance |
| Disability | Whether your cover replaces enough income if you can’t work |
| Critical illness | Whether a lump sum on diagnosis fits your plan |
| Long-term care | Whether it’s worth considering before premiums rise with age |
Estate documents
A will, powers of attorney, and the beneficiaries on RRSPs, TFSAs, pensions and insurance tend to drift out of date in this decade, after moves, a separation, a remarriage or the children growing up. The estate planning guide covers each document.
Career and job security
Peak earnings come with more to lose from a layoff: a larger emergency fund, current skills and an active network are the usual protections. If a layoff happens, the steps are in what to do when you’re laid off.
Retirement targets
With 20 or so years to go, retirement planning moves from a general habit to a target: an estimate of spending in retirement, the income CPP, OAS and any workplace pension will provide, and the savings needed to fill the gap. How much do I need to retire walks through the estimate.
A checklist for your 40s
| Area | Milestone |
|---|---|
| Retirement saving | Unused RRSP room being used; TFSA contributions continuing |
| Mortgage | On track to be paid off by your target date |
| Children | RESP checked against the post-secondary plan |
| Parents | You know where their documents are and what they’d want |
| Insurance | Life and disability cover matched to current needs |
| Estate | Will, powers of attorney and beneficiaries current |
| Plan | A retirement estimate run and reviewed each year |
Related resources
Sources
The figures and rules on this page come from these sources, last checked against them on August 29, 2026. How we check facts.
- Canada Revenue Agency: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE