40°F is pretty cold for shorts in the rain, IMO.
The worst part is that your shoes will get absolutely drenched from the inside if you're only wearing shorts. Even if they're "waterproof" shoes. Most of that cold water raining down on your head, torso, and legs will end up dribbling straight down your legs, soaking into your socks, and eventually filling up your shoes. Pedaling with water-filled sponge shoes is no fun.
I've been bike commuting rain/shine in Minneapolis for about five years now. I've found that water proof shell gear is worth the price. After biking through a storm, I can come home strip off my shell layers, and be pretty dry underneath (minus a little sweat). Generally, the waterproof gear is also wind-proof too, which makes it great for the cold windy winter commutes.
My cutoff for "just get wet" is about 65°F. If it's raining and warm, it's bearable (and maybe even a little fun!) to be soaking wet on the commute home. Not so much fun to get soaked on the way in to work. I'm lucky enough to have showers & a place to hang all my wet gear at work.
Layering is definitely a bit personal. Some people heat up faster than others. I would rather be a little cold than a little hot and sweaty. For 40°F, I am usually rocking:
- Waterproof shoes (mine are hi-tops, makes it super hard for the water to get in). My biking cohorts swear by their Lake shoes. A bit too pricey for me. I use my waterproof hiking boots.
- Merino wool socks crew-length
- Waterproof pants (no need for base pants layer at 40°F for me anyway).
- Torso: Moisture-wicking base + insulating layer + waterproof rain shell. It does keep you much more dry if the rain shell hood can fit over your bike helmet. Make sure it doesn't restrict your visibility though!
- Waterproof gloves - at 40°F, I'll use my heavy waterproof winter mitts. Need to be somewhat careful that they don't impede your ability to brake, but manageable.
- Head: Bike helmet + Ski goggles + Rain-shell hood. Goggles because it's no fun getting pelted in the eyes by big water droplets.
- Waterproof backpack
Almost all of my gear is from REI. They do a decent job curating gear, and have good deals on their outlet store at season begin/end. Everything I've bought there has lasted many years. My rain jacket (Marmot brand) & pants (REI brand) have lasted five years so far and are still going strong with constant use. The 4uCycling stuff looks awesome, I'll have to check them out!