Retirement Advice for Late Starters |How to Catch Up

Many people get a late start on saving and planning for retirement. Career changes, education costs, family needs, layoffs, medical issues, and other priorities often take precedence in your 20s through 40s. However, with some diligent catch-up moves, it’s possible to build a secure retirement foundation even as a late starter. Here are some retirement advice for late starters who have yet to begin seriously saving or investing for their later years. With strategic effort, you can still pursue a comfortable retirement.

13 Retirement Advice for Late Starters

Assess Your Current Finances

First, take an honest look at your financial situation—income, assets, debts, and expenses. This helps you understand where you stand in terms of retirement savings and if you have any discretionary funds to direct toward catch-up contributions.

Tally up savings and investment balances across workplace plans, IRAs, taxable accounts, real estate equity, and other assets. Calculate your net worth. Gather documentation of debts like mortgages, student loans, and credit card balances. Review monthly spending patterns.

While it may be sobering to see on paper, assessing your true financial picture is important. This gives you clarity on how much you need to plan and save moving forward.

Shift Household Budget Toward Retirement Savings

If your budget review uncovers discretionary spending on wants rather than needs, look for ways to trim excess spending. Redirect those funds to maximize retirement plan and investment account contributions.

Even relatively small lifestyle changes help free up extra money to put toward retirement. For example, saving $200 a month by dining out less could mean an additional $2,400 annually into your IRA. Pick painless budget cuts that won’t impact your quality of life.

Open and Fund an IRA

A late retirement starter should open and begin consistently funding a Traditional or Roth IRA. The annual contribution limit for those under 50 is $6,500 in 2023. While that may seem difficult to part with at first, automatic monthly transfers from your checking account make it easier.

Even modest annual IRA contributions of just $1,000-2,000 at age 45 that you increase over time would generate $40,000 or more in savings by age 65 at a 6% return. IRAs offer tax benefits, flexible investment options, and the ability to grow your nest egg.

Max Out 401(k) Contributions

If your employer offers a 401(k) plan, contribute enough to get the full company matching contribution if available. Those matching funds are free money. Beyond that, try to maximize allowable contributions which is $22,500 in 2023 for people under 50.

Retirement Advice for Late Starters

Setting 401(k) contributions high forces savings that you generally adapt spending habits around. Let’s say you direct 15% of each paycheck into your 401(k). You adjust your lifestyle accordingly, creating a new normal. 401(k)s allow significant tax-deferred growth.

Ask About 401(k) Catch-Up Provisions

If your employer’s 401(k) plan offers catch-up contributions, take full advantage starting at age 50. This provision allows those 50+ to contribute an extra $7,500 beyond the standard limits in 2023. Even if you haven’t consistently saved before, catch-up contributions turbocharge your 401(k) in the years leading up to retirement.

Shift Investment Risk Tolerance

Retirement late starters need growth-oriented investments to accumulate savings rapidly in a short time period. This generally means a higher risk tolerance and heavier weighting in stocks vs. conservative options like bonds and money markets.

As you near retirement, gradually dial back risk and shift more funds to stable investments. Workplace plans and IRAs allow you to select investments aligned with your age and goals. Get guidance from a financial advisor on smart asset allocation.

Find Ways to Earn Extra Income

Look at options for earning extra income that can be directed fully into savings and investment accounts. Take on part-time work or freelance gigs that accommodate your schedule. Monetize a hobby, rent out property, or sell unneeded items online. Launch a small side business. Every little bit helps when catching up.

Delay Social Security Benefits

Waiting until full retirement age or even age 70 to begin collecting social security enables you to receive larger monthly payments. This is especially important for retirement late starters who need to maximize this source of guaranteed income.

Coordinate claiming social security with tapping retirement account funds for the most tax-efficient income stream. Let your 401(k) and IRAs grow longer untouched. Larger social security payments help make up for low balances in other accounts.

Consider Annuities to Supplement Savings

For those far behind on retirement savings, annuities can provide guaranteed income for life regardless of how long you live and market swings. There are various types of annuities with differing features, benefits, and fees. These instruments provide income assurance if you have undersaved.

Pay Off Debt, Especially Credit Cards

Carrying high-interest debt like credit card balances makes saving incredibly difficult. Make a debt pay-off plan and attack credit card and consumer debts first before directing funds into retirement accounts. The higher interest you pay, the more urgent eliminating that debt becomes.

Retirement Advice for Late Starters

Ideally, cut up credit cards and simply don’t take on new debt given a short retirement horizon. Then focus on student loans and other lower-rate fixed debts. Retiring debt-free is wise if playing catch up.

Relocate Somewhere Affordable

Moving to a less expensive area cuts housing costs and frees up more money to save. With remote work options expanding, you may not even need to change jobs. Even small towns within a few hours of major cities offer significant rental/mortgage savings worth considering to stretch retirement funds further.

Meet with a Financial Advisor

Retirement late starters can benefit from expert guidance to create a tailored plan to maximize savings in a short timeframe. A fee-only financial advisor takes your specific situation and goals into account when advising on investments, risk management, income strategies, and taxes.

Look for a fiduciary advisor obligated to serve your best interests. Paying for expert advice now could mean tens of thousands more saved by retirement.

Delay Retirement If Needed

The reality is that you simply cannot save enough in the remaining years before your planned retirement. In that case, working a few additional years enables more time for catch-up savings and delays drawing from accounts. Just a couple extra years to keep building your nest egg makes a big difference.

Even if you want to fully retire eventually, consider working part-time as a bridge to create more savings while escaping the daily grind. Phased retirement transitions help late starters.


Catching up on retirement savings is difficult but very possible with focus and intentional effort. Implementing as many of these tips as possible helps late starters gain major ground, even in just a few years. With diligence and smart planning, you can still pursue the retirement lifestyle you want.

FAQs About Retirement Advice for Late Starters

How far behind on retirement savings is considered too late?

It’s generally not “too late” if you have 10-15 years before retirement age to catch up on savings. At that point, very diligent saving and delaying retirement a few years can generate sufficient funds to retire comfortably.

What if I’m only 5-10 years from retirement age but have little saved?

In that scenario, you will need to take drastic money-saving measures and likely work at least part-time in retirement. Annuities and reverse mortgages may help supplement limited savings. Accepting a more modest retirement lifestyle will be required.

What is the number one thing late starters should do?

Number one is to consistently fund IRAs to the max and take advantage of 401(k) catch-up contributions. Even just $5,000-10,000 extra saved annually in your 50s makes a big difference thanks to compound growth. Make this a priority.

How can I have enough to retire if I don’t start saving until my 40s or 50s?

It becomes very difficult at that point unless you can drastically cut expenses to save a sizeable portion of your income. Delaying retirement a few extra years helps. Annuities can provide guaranteed lifetime income when savings fall short as well. You may need to accept a more frugal retirement.

What retirement savings milestones should late starters aim for?

  • $100,000 saved by age 50
  • 2x your salary by 55
  • 5x your salary by 60
  • 8x your salary by 67

Adjust amounts down if retiring earlier than full retirement age. The key is continually increasing contributions.

A Ahmad
A Ahmad

A Ahmad, a certified financial planner, Retirement Step was created to share over two decades of retirement planning experience with readers looking to take control of their financial futures.

Articles: 104