Home » What to Do if You’re Late to The Retirement Savings Game

What to Do if You’re Late to The Retirement Savings Game

This week, in honor of Financial Literacy Month, we’ve been focusing on retirement savings. I talked on Monday about how to balance retirement savings and debt payoff while helping your kids out with college costs, and on Tuesday Brad from over at Maximize Your Money shared an awesome post on why and how you should start saving for retirement now. In Monday’s post, I shared that nearly 1 in 3 Americans have no money saved for retirement, and that 56% of Americans have less than $10,000 saved for retirement. If you fall into one of those two categories and are in your 40’s, 50’s or beyond, no worries. Today’s post is for you. Today we’re going to talk about what you can do if you’re late to the retirement savings game.

Late Retirement Savings Strategies

The first thing you need to do if you’re under-prepared financially for retirement and you’re over 45 is to not panic. It’s easy to want to do the ostrich thing and stick your head in the sand in fear, but now is the time to face the music head on. It’s like the final battle in the Rocky movies, so put on your boxing gloves and prepare to fight.

Determine What You Need to Retire

Don’t let this part scare you, even if what you need based on calculations is impossible to save. The goal for you at this point is to increase retirement savings as much as possible.

Start with analyzing your post-retirement expenses, as this will be a key component that needs to have an answer before you can calculate post-retirement money needs. What will your housing expenses be? What will health care costs be? What will insurance premiums for things like long-term care policies be? What will you spend on groceries and other personal costs? How much will you save each month for upcoming long-term expenses such as a replacement car or housing repairs?

This book is a great read for helping determine what you need to retire:

How Much Money Do I Need to Retire? (60 Minute Financial Solutions Book 5)

There are also many online calculators that can help give you an idea of what you need to retire. Here’s a link to one retirement income calculator.


Analyze Your Current Expenses

One step that will really help you begin a journey to maximizing retirement savings is to analyze your last three to six months of spending if you’re not already spend-tracking. Go back through credit card and bank statements and try to get an idea of what you’re currently spending each month.

How much are your housing costs? What debt payments do you have? How much are you spending each month on utility bills, insurance, cell phone costs, eating out/entertainment, clothing, personal care, etc.?

From here you should be able to create a budget and a spreadsheet for tracking expenses. Your budget will help you to have a written plan for your money each month. Your spend-tracking sheet will help you keep track of where your money is going each month.

By keeping regular track of your projected expenses and your actual expenses, you will be able to maximize the cash you have available to put into retirement savings.

Practice “Ruthless Prioritization” with Your Expenses

I stole this saying from Brad, who stole it from a friend of his, but it’s quickly become a household saying here. The goal with “ruthless prioritization” is to lower or eliminate all expenses as much as possible, and to make retirement savings (or whatever your financial goal is) top priority, to the exclusion of everything else.

This might mean little or no restaurant or entertainment expenses for the next few years. It may mean vacations have to be put on hold. It might mean you start doing your facials, hair and nails at home and forego salon trips.

It might mean the cable subscription has to go.

Only you can decide what “ruthless” prioritization means to you. There are other ways you can cut your expenses too. Call around to a few different insurance companies and see if you can get a lower rate for the same coverage. We saved several hundred dollars a year when we switched to Geico, and they’ve provided us with wonderful service for nearly three years now.

Talk to utility providers or shop around to lower costs there. We dumped our big name cell phone provider for Republic Wireless two years ago and couldn’t be happier. We now pay $40 a month or so for two cell phones with data, thanks to Republic’s monthly data buy back program. Yep, they buy back any data you don’t use and credit your account with a refund.

Go through every expense in your budget and ask yourself “Is there a way I can reduce or eliminate this expense?” This tactic will help you maximize retirement savings and help you reach your retirement goals.

Is Republic right for me? Smartphone plans starting as low as $5 per month.

Work to Eliminate Any Debt

If you’ve got debt, you’ve got to make it a priority to pay it off. Analyze your debt situation and ask yourself some questions.

  • Can I trade in a newer car with an expensive payment and get a less expensive car?
  • Can I downsize my house and pay less for a mortgage payment or rental costs?
  • Can I refinance my current loans or credit cards and get a lower rate?
  • Can I sell items I own to reduce my debt balances

Again, the goal here is to increase your excess income each month in order to have more money to save and invest.

Consider Increasing Your Income

If you’re behind on retirement savings, increasing your income and putting that extra money will help you reach your retirement goals faster. There are several ways you may be able to increase your income. Here are some ideas.

  • Ask for a raise or work toward a promotion at your current job
  • Look at potentially switching jobs to a higher paying one, either within or outside of your current company
  • Get a second job on nights/weekends
  • Start a side hustle such as babysitting, pet sitting, freelancing or tutoring
  • Rent out a room or some storage space in your home, either in your garage or your basement

Make sure as the increase comes in that you are committed to using it all for retirement savings, with a second focus on debt payoff if debt is a problem. Don’t allow yourself to be wooed into using it for unnecessary splurges.

Utilize Current Assets to Increase Retirement Savings

Here is another strategy that could help you have more money to save. Look at your current list of assets. What do you have? A house that you own? An expensive car? Other assets such as an RV, vacation home or boat?

Sell the Toys

Any extra stuff that isn’t necessary to life or a vital part of your retirement plan (as in “I plan on living in my RV after I retire”) can be sold and the money put toward saving and investing, or paying off debt.

Sell the House

If you’re not planning on living in your house after retirement or if the payment and expenses on it are just too large, now might be the time to downsize and sell, moving into something more affordable that can be paid off by the time you retire.

Another option might be to sell it to one of your children (or all, as an investment) and have them rent it back to you at a price you can afford.

Again, the goal is to increase monthly cash flow so that there is more to put toward retirement savings.

Maximize Tax-Deductible Retirement Savings

Now that you’ve re-worked your budget and expenses in the name of maximizing your budget surplus (the amount of money you have left over at the end of each month) and increasing how much money you have to put into retirement savings, it’s time to take full advantage of the tax-deductible savings plans for retirement.

Start With Your 401(k)

If your employer has a 401(k) plan – especially one with a matching program – contribute the maximum you can afford/are allowed to the plan.

As of this year, the maximum an employee can contribute to a 401(k) is $18,000 per year. Those age 50 and over are allowed to make a catch-up contribution of up to $6,000 a year.


There are two types of IRAs you can invest in for retirement: Traditional, and Roth. The contributions you make to a Traditional IRA are tax deductible up to $5,500 a year, with an additional catch-up contribution of $1,000 per year for those age 50 and above.

The benefit in using tax-deductible savings vehicles for retirement is that generally, your income post-retirement will be lower than your pre-retirement income, resulting in a lower tax bracket for your retirement income.

Non-Tax Deductible Savings

The most popular non-tax deductible retirement vehicle is the Roth IRA. The Roth IRA is not deductible on your taxes, but the earnings are never taxed. They’re free, basically.

The contribution limits for IRAs apply whether you pick Roth, Traditional or a combination of both.

Here’s an article that may help you decide which type of IRA is best for you: Roth vs Traditional IRA: Which is Best for You?

This bestseller helps millions who are starting late on retirement savings: Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age (Finish Rich Book Series)

What Should I Invest In?

A financial advisor at work or outside of work (get references – several of them – before signing on) will help you determine exactly what to invest in, but because you’re starting late it’s best to minimize high risk products and choose more conservative investments. Although these conservative investments won’t earn you as much of a return, they also will minimize risk of losing money.

*A Note About Annuities. I’ve coached several people who’ve been talked into investing in annuities, and it’s turned out badly for every one of them. Please be careful about investing in annuities.


The most important ingredient in successful retirement saving when you’ve started late is the choice to persevere. Don’t beat yourself up for past financial mistakes. Don’t fear about the future.

Just put your nose to the grindstone and move forward, knowing that every dime saved will help you in retirement with the interest it earns. Any forward movement from where you are today is a benefit. Count it as such and just keep moving. You’ll likely get farther than you expect.

Are you on track with retirement savings? 


  1. I’m slightly behind if you look at what I “should” have, but probably far ahead of most people on average. It’s funny because my bar is set against people who have already retired before they are my age…a tough act to follow. On one hand it feels like motivation, on the other, it feels…kind of rough.

    • Laurie says:

      Yeah, I hear you there. When you read about 33 year olds that are already retired it can deflate your sails a bit. I try not to read those stories too much. 🙂

  2. I think I’m on track at 24 (almost 25). I have 5.5k in my roth IRA, 13k in 401k, and just bought a second property and am working to rent out my current house to build passive income…

    While I’ve been working 2 years in Corporate America and I could have more in retirement accounts, I’ve been working on paying down debt and figuring out my housing situation. There are so many ways to make money in the world… just need to go find them!

    • Laurie says:

      Well, Erik, you’re further ahead than most in your age group. I love that you’re diversifying with real estate and business stuff. That’s the ticket. We are working our plan that way too.

  3. This is a FANTASTIC guide for getting on track if you’re behind on the retirement savings curve. Y’all–no matter what age you are–you need to save for retirement! I opened up my Roth IRA when I was 21 years old and I contribute $200 a month (that’s what I can afford). There was a time where I put just $10 in each month–but it was something.

    • Laurie says:

      Thanks!! That is awesome that you started contributing so young; the power of compound interest will definitely be working in your favor. I love what you said about the times when you put in just $10 a month. It’s the habit that matters!

  4. Brian says:

    A great overview Laurie. We are slightly behind, but in good shape compared to many. It’s something we are making sure our children understand. We want them to save and invest from an early age.

    • Laurie says:

      We are the same way: probably could have more at this point but doing better than many our age. We show our kids that Dave Ramsey comparison about starting retirement savings at 18 vs 27. It’s amazing what a difference 10 years can make.

  5. We are on track. We started contributing to our 401k in our mid 20s, so this helped tremendously. But we didn’t get really serious about the debt and savings until our mid-30s.

    My parents got a very late start, but by paying off all their debt – including their mortgage, and trimming their monthly expenses, they are able to retire comfortably. My mom still works part time until she can get Medicare (next year) to cover her health insurance costs.

    This is a great post, Laurie! It’s important for people to realize it’s not too late and they shouldn’t give up. Like you said, starting late means it may take some hard work, perseverance, and cutting the extras, but it can be done.

    • Laurie says:

      Thanks, Amanda! So glad to hear you guys are on track – that is wonderful!! And what a great story about your parents too – so happy for them!

  6. We’re on track…luckily I started contributing to my retirement accounts when I got my first job. Sometimes when I read about those who retired early I feel behind but when compared to most people, we’re doing fine. It’s tough living in an expensive area but fortunately I’ll have a pension too if I stay until about 55. Pensions are rare nowadays so I am lucky to have that as well.

    • Laurie says:

      I think in the PF blogging world we have many to look up to, which makes it difficult to perceive how well one is really doing financially. I am quite confident you guys will be just fine, Andrew. 🙂

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