We’ve heard it time and again. The best way to ensure a secure financial future is to start saving for retirement early.
We know it should be a priority, but sometimes life gets in the way. We focus on building careers and families, paying off debt, and dealing with the curveballs and unanticipated expenses that life deals out so indiscriminately. Years pass and suddenly comes the sobering realization that your retirement planning is way off track.
Take a breath.
You’re not alone. A 2024 survey by Bankrate found that 57% of Americans feel behind on their retirement savings. And sure, while starting earlier certainly gives your money more time to grow, this is definitely a case of better late than never. The important thing is that you’re acting now, and every dollar you save puts you a dollar closer to your goal.
Focus on where you are now and what steps you can take to build a better future. You don’t have to upend your entire life or dine exclusively on watery gruel to catch up. With some smart strategies and a bit of discipline, you can make meaningful progress toward your retirement goals. Here’s how to get started.
Acknowledge where you are without judgement
Guilt, regret, self-disgust—these are all natural feelings we may confront when we feel like we’ve let ourselves down in some way. But these negative emotions aren’t constructive, and neither is dwelling on the past.
What will help is getting a clear picture of your current financial standing. Start with a few questions:
How much do I currently have saved for retirement?
How many years are left until my current planned retirement date?
What other income sources will I have in retirement (Social Security, pensions, etc.)?
Once you know where you stand, you can build an action plan. You may feel like you’re behind, but you now have a starting point.
Set a target even if it feels intimidating
The next step is to decide what you’re working toward. There’s no magic number; everyone has a different idea of how much money they need to live comfortably. A common estimate is around 75% of your pre-retirement income annually. For example, if you earn $80,000 per year before retirement, your goal might be to generate around $60,000 in retirement.
If that figure seems overwhelming, don’t panic. You can break the goal into smaller, more digestible milestones. If your ultimate goal is to save $500,000 for retirement, focus on reaching $100,000 first, then $250,000, and so on. It’s easy to stay on track when you pursue smaller steps that seem more achievable than focusing on a giant, abstract figure.
Maximize current contributions
When you’re playing catch-up, every contribution counts. Start with your employer-sponsored 401(k) plan. If you have access and aren’t contributing, sign up now. Even saving a small percentage of your paycheck makes a difference, especially if there’s an employer match. Over time, you can increase your contribution as your budget allows with the ultimate goal of maxing out your contribution.
For 2025, the maximum contribution you can make to your 401(k) is $23,500. If you’re between 50 and 60, you can also make an additional $7,500 catch-up contribution. The catch-up contribution is $11,250 for those who are 60 or older.
Importantly, the 401(k) is a tax-advantaged savings plan. Contributions grow tax deferred, meaning that you pay taxes only when the money is withdrawn. This leaves more money available to grow.
Other tax-advantaged savings plans are the Individual Retirement Account (IRA) and the Roth IRA. While the Roth IRA is subject to certain income limits, the IRA is not. Individual savers under 50 may contribute $7,000 annually to an IRA or Roth IRA, while those over 50 can contribute $8,000.
Find money hidden in plain sight
Trying to squeeze money out of your budget may seem like one of the labors of Hercules, but sometimes it’s easier than you might think. So often, we spend small amounts here, there, and everywhere without even noticing, slowly getting nickeled-and-dimed to death. Those little bits every day add up. But don’t worry, I’m not going to carp about your takeout coffee.
Instead, go through your bank statements and look for how much you’re spending on things like subscriptions and memberships you’re not using, restaurant meals, and impulse purchases. You’re likely to find that there are a lot of things you can cut out without even noticing a discernible change in your quality of life.
You don’t have to deprive yourself of every pleasure—just make a few cutbacks. Cut out a couple of restaurant meals, subscribe to one fewer streaming service, and you’ve probably freed up $100–150 that you can invest for growth. Even an extra $100 invested in a growth-focused option may blossom over time
Another option is routing windfalls like tax returns and bonuses directly into your retirement account. Lump sum investments can make a big impact in your retirement account, while they’re nothing but a temptation when readily available.
Don’t just save. Invest!
When you’re behind schedule, the power of investing can become even more critical. Saving money alone usually isn’t enough to help you bridge the gap. You likely need to invest to grow your wealth.
Since 1957, the S&P 500, the index most representative of the overall US stock market, has booked an average annual return of over 10%. When you invest and remain invested over a longer time horizon, compounding serves as a powerful force with the potential to help grow your wealth.
If you’re new to investing, there are many index funds and mutual funds that can spread your money across investments and help manage risk through diversification. Lifecycle funds pegged to the year you plan to retire can also be a good choice as they automatically adjust risk levels as you approach retirement.
Take advantage of automation
Saving becomes even easier when you don’t have to take direct action. Set up automatic contributions to your retirement accounts so you never even see the money hit your checking account. Out of sight, out of mind.
When it’s right there in front of you, it’s easy to yield to temptation. What could it hurt to skip a month? But then one month becomes two, two months becomes…you see where this is going. Treat your retirement contributions just as you would any other non-negotiable expense like a car payment or rent.
Balance retirement saving with your life
Many people fear that catching up on retirement savings means draining life of every pleasure and sacrificing everything they currently enjoy. There’s no need to be so draconian. It’s about balance.
You don’t have to skip the family vacation, just downsize a bit. A trip that’s a little shorter and a bit closer to home can still be a fun and relaxing break. Instead of going to an expensive restaurant with friends, suggest a cookout at home. You can still have a good time without breaking the bank.
The key is to prioritize retirement savings while still leaving some breathing room for the things that make life enjoyable. This is the kind of balance that can make your plan sustainable.
Consider delaying retirement
While everyone looks forward to retirement, waiting to retire can be one of the most effective ways to strengthen your financial position. By working just 2–5 years longer than planned, you’ll have more time to save, and you’ll reduce the number of years you need to rely on your savings.
Another bonus is that delaying Social Security benefits can significantly increase your monthly payments. For those born after 1943, every year you wait beyond the full retirement age (up to 70) increases your benefit by 8%.
The takeaway
There’s no doubt about it: falling behind on retirement savings is stressful and it can be overwhelming when you stop to think about it. But you can take heart from addressing the issue head on.
Small and consistent actions have the potential to yield bigger results over time when you persist. And the sooner you start, the more time your efforts will have to work in your favor.
You can build the retirement you want, even if it feels awfully far off today. There will, of course, be setbacks. Don’t be discouraged. Persistence is the key to meeting your future goals.
4 min read
