How to Catch Up on Retirement Savings
If you're behind on retirement savings, you're not alone. Nearly half of Americans feel they haven't saved enough. The good news is that it's rarely too late to make meaningful progress.
Assess Where You Stand
- Current retirement savings: Add up all 401(k)s, IRAs, and investment accounts
- Target savings: A common benchmark is 10-12x your pre-retirement income by age 67
- Social Security estimate: Create an account at ssa.gov to see your projected benefit
Max Out Catch-Up Contributions
If you're 50 or older, the IRS allows extra contributions:
- 401(k): Additional $7,500 per year (total $30,500 in 2026)
- IRA: Additional $1,000 per year (total $8,000 in 2026)
- Combined potential: Up to $38,500 in tax-advantaged savings per year
Reduce Expenses and Redirect Savings
- Downsize housing — a smaller home frees up significant cash
- Eliminate debt — paying off car loans or credit cards frees monthly cash flow
- Cut lifestyle inflation — resist spending more as you earn more
- Review insurance — you may be over-insured at this stage of life
Delay Social Security
Every year you delay claiming (up to age 70) increases your benefit by about 8%. Delaying from 62 to 70 can increase your monthly benefit by up to 77%.
Consider Working Longer
Working even 2-3 years beyond your planned retirement age provides a triple benefit: more years of contributions, fewer years of withdrawals, and more time for investments to grow.
Optimize Your Investment Allocation
- Don't be too conservative too early — even at 55, you may have 30+ years ahead
- Consider target-date funds — they automatically adjust allocation
- Rebalance annually
Boost Your Income
- Ask for a raise or pursue a promotion
- Start a side business using professional expertise
- Rent out a spare room or property
Direct all extra income straight to retirement accounts.
Avoid Costly Mistakes
- Don't panic-invest in risky assets — chasing returns often backfires
- Don't raid retirement accounts — early withdrawals come with taxes and penalties
- Don't ignore your employer match — it's free money
- Don't go it alone — consider a fee-only financial advisor
The Bottom Line
Catching up requires saving more, spending less, investing wisely, and potentially working longer. The most important thing is to start now. Every dollar saved today has the potential to grow significantly by retirement.
