For many older millennials—now in their 40s—it’s time to play catch-up.

According to a report by Transamerica Center for Retirement Studies, the median retirement savings for this group sits at $73,000.

That’s $427,000 less than the $500,000 target most 40-somethings believe they’ll need and nowhere near the $1.6 million experts actually recommend. 

“Unfortunately, I see this shortfall often with my millennial clients. They came of age during the Great Recession and are now dealing with rising housing costs, inflation, and higher interest rates during some of their prime saving years. The focus is to make it through the month, not maximize retirement contributions,” says Elias Friedman, founder and senior wealth adviser at Kadima Wealth in Schaumburg, IL. 

If you’re one of the 40-somethings with this wide gap, the clock is ticking. The good news is it’s still possible to meet your retirement goals. 

All it takes is some dedication, persistence, and creativity. 

The role of housing costs

Each generation has to work through a complex set of circumstances. For some, it was financial hardship, war, or disease.

For millennials in their 40s, it’s the cost of housing.

“Housing used to be the thing that built middle-class wealth. However, when mortgages and property taxes rise faster than stagnant wages, things get tough,” says Jeromee Johnson, president and CTO of Tellus in Kansas City, KS.

The cost to maintain a home keeps increasing, too. 

“The price of hot water tanks and kitchen remodels, for example, have soared. Even homeowner’s insurance continues to climb, roughly double the rate of inflation, especially in disaster-prone areas,” explains Steven Rogé, chief investment officer and CEO of R.W. Rogé & Company in Beverly, MA.

Johnson notes that retirement contributions—unlike mortgage payments and other expenses—don’t have a due date or late fee, so the urgency to make them isn’t always there. 

“Nobody repossesses a 401(k) for skipping a year, so it feels rational to skip it,” Johnson explains.

Paul Carlson, CPA and managing partner at Law Firm Velocity in Chandler, AZ, points out that older millennials are carrying really high housing costs at a stage in their lives when they should be able to switch gears and start putting more of their income into retirement savings. 

Boomers, at the same age (mid to late 40s), had decades to build equity and pay down their mortgages. 

“I don’t mean housing was super cheap back then, but boomers did have more disposable income available for retirement planning. They also had time on their side, since a lot of them entered the market earlier in their adult life,” Carlson explains.

How to close the gap

The first step to closing the gap is realizing you have it.

“A $427,000 retirement shortfall can be overwhelming for many people, but the bigger concern is that many people don’t realize how far behind they are until their 40s,” explains Friedman.

The sooner you understand you’re behind, the more options you’ll have. Here are a few strategies to get you back on track:

Reduce your largest expenses

The gap is too large to cover by simply canceling your gym membership or forgoing that $15 avocado toast. 

You could (and definitely should) eliminate anything unnecessary, but that’s not what’s going to move the needle quickly. 

“Look at your biggest assets and expenses. Ask yourself whether they’re hurting or helping your retirement. If they’re derailing it, figure out how you can lower them,” says Carlson.

Consider downsizing

Downsizing isn’t right for everyone, but for many older millennials, it can be the key to closing the gap.

“If you’re living in a four-bedroom family home but your kids are moving out in ten years, now is a good time to start thinking about downsizing and how much it could put back in your pocket each month,” Carlson explains.

Make frugal choices

Take a page from our great-grandparents by living frugally.

“Vacations go from overseas travel to road trips to local vacation spots. Education goes from the Ivy League to the best state school,” says Rogé.

It’s not the time to keep up with the Joneses, who may not be retiring anytime soon anyway. 

Treat your home as a financial engine

If you do decide to stay put, let your home work for you.

“I suggest refinancing or recasting when interest rates drop, eliminating private mortgage insurance after reaching 20% equity, and using the additional cash flow to make overdue contributions to retirement plans,” says Cody Schuiteboer, CEO of Best Interest Financial in Detroit. 

Also, a home equity loan or HELOC to pay down high-interest debt and contribute more to retirement is acceptable. 

“Tapping into home equity to fund your lifestyle, however, is not,” adds Schuiteboer.