Is it Too Late to Start Saving for Retirement?

They say youth doesn’t last forever. Does this mean it’s too late to start saving for retirement ? For many, it’s a question that can cause a lot of stress. After all, recent numbers show that more than a quarter (27%) of Americans 59 and older have no retirement savings to fall back on.

Regardless of where you are with your finances, it’s never too late to start saving for your future. If you’re a bit behind on planning (or just starting out), here are some tips to help your savings grow as you work toward a comfortable retirement .

Set Clear Goals

When you are saving for retirement , it’s important to have a clear goal. The biggest questions you’ll need to answer are:

●???? What age do you plan to retire?

●???? What are your plans after retirement?

Answering these questions gives you a target date to shoot for as well as an idea of how much money you’ll need to maintain your lifestyle.

Let's say John, a 45-year-old marketing manager, plans to retire at 65. He wants to maintain his current lifestyle, which requires an annual income of $75,000. Considering inflation and his life expectancy, John estimates he'll need a retirement nest egg of approximately $1.5 million. With this clear goal in mind, John can now create a savings plan to help him reach his target.

Don’t forget to adjust your retirement goal for inflation. Most Americans now believe they’ll need $1.27 million to retire in confidence—though this will depend on your individual retirement goals. By setting clear goals, you’ll be better able to track your progress as you near retirement.

Consider Delaying Retirement

If you’re behind in your retirement savings, you might consider delaying your retirement a few years. Doing so gives you more time to save, and this may be all the more beneficial if your employer offers matching retirement contributions. Additionally, delaying retirement reduces the number of years your portfolio will need to support you, which can significantly improve your retirement outlook.

There’s another benefit to delaying retirement. You’ll receive the maximum Social Security amount if you retire at age 70. This additional income can supplement your retirement savings and help you stretch your funds during your golden years.

Take Advantage of Catch-Up Contributions

Traditional retirement accounts set limits on how much you can contribute. But once you turn 50, you can take advantage of catch-up contributions. For example, in 2024, a 401(k) plan only allows you to contribute $23,000 annually , but after age 50 you can contribute an additional $7,500, totaling $30,500. Similarly, you can contribute an additional $1,000 to an IRA once you turn 50.

Suppose Sarah, age 50, starts making catch-up contributions of $7,500 per year to her 401(k) in addition to her regular contributions of $23,000. If her investments earn an average annual return of 7%, these catch-up contributions alone could add an extra $188,000 to her retirement savings by age 65.

These contribution limits can change each year. As time progresses, it’s important to stay on top of these limits and catch-up allowances to pad your retirement savings as much as possible.

Adjust Your Household Budget to Save More

Saving for retirement may require some sacrifices. What can you cut from your current household budget to make room for more savings?

Start by taking inventory of your monthly expenses. Most financial advisors recommend a 50/30/20 approach to household budgeting. In this approach, 50% of your income goes toward your needs (such as your mortgage or utilities), 30% to your wants (such as entertainment), and 20% goes toward your savings.

One simple way to reduce your monthly expenses is to review your subscriptions and memberships. Cancel any unused gym memberships, magazine subscriptions, or services you rarely use. By cutting out just $50 per month in unnecessary expenses, you could save an additional $600 per year toward your retirement. It doesn't sound like much, but it will add up over time.

If you’re spending a lot on things like unused streaming services or gourmet coffees, it may be time to cut back on these “wants” to have more for savings. And if you can pay off debts like your mortgage or car loan, you’ll have even more to divert toward your retirement savings.

Earn Money Past Retirement

According to the AARP, those who work part-time after they retire are happier, and there’s even data to suggest that staying busy can help you maintain healthy brain function . If you’re behind in saving for retirement, a part-time job can provide supplementary income for you and your family.

Some popular part-time jobs for retirees include consulting in your area of expertise, tutoring, pet-sitting, or working as a tour guide. You could also consider turning a hobby, such as gardening or crafting, into a small business.

This doesn’t have to be a high-paying job. Even a simple part-time position can provide enough income to cover some of your post-retirement expenses. Some part-time positions even offer health benefits, which can eliminate one of the largest expenses for retirees.

Today Is the Day to Start

Now’s the perfect time to start saving for retirement if you haven’t yet. At Tapparo Capital Management , we think everyone deserves the retirement they’ve always wanted. Our team can help you build a smart plan using different investments and insurance options, all tailored to your financial goals and needs.

Your dreams are important, and we’re here to help you feel good about your financial future. To schedule a “Get Acquainted Call” to see if we are a good fit for each other, call 978-887-1121 or email [email protected] .

About Andy

Andrew Tapparo is a fee-only financial advisor at Tapparo Capital Management, a financial planning firm in Topsfield, MA, helping clients turn their savings into a retirement income that lasts. Inspired by the quote “Choose a job you love, and you will never work a day in your life,” Andy founded Tapparo Capital Management in 1997 with a passion for helping clients enjoy a truly worry-free and fulfilling retirement and experience financial freedom. As a Retirement Income Certified Professional (RICP?) , he designs retirement strategies along with sound money management to help clients retire with confidence.

Andy holds a Bachelor of Science in Industrial Engineering from Rochester Institute of Technology in Rochester, New York, and a Master of Science in Finance from Bentley University in Waltham, Massachusetts. Specializing in retirement income planning, Andy completed a comprehensive financial industry education program at The American College of Financial Services and was awarded the Retirement Income Certified Professional? designation. He is frequently quoted in the media as a financial expert.

Andy and his wife, Susan, live in Topsfield, Massachusetts, and have two beautiful daughters. Outside of work, he is an automobile enthusiast, enjoys taking road trips, and loves the Outer Banks of North Carolina. In his spare time, he volunteers with the local high school varsity girl’s basketball team as the team statistician and runs the team’s website. He is passionate about supporting charities that serve our veterans and their families. To learn more about Andy, connect with him on LinkedIn .