7 Ways to Catch Up if You’re Late on Retirement Savings

Experts like Fidelity Investments recommend you save at least 10 times your salary by your 67th birthday if you want to have a comfortable retirement. Supplemented with Social Security, this may be enough to cover your expenses through an average life expectancy.

Those numbers account for increasing income and compound interest as you age. An on-time retirement savings looks like this:

  • 1x your salary saved by age 30
  • 3x your salary saved by age 40
  • 6x your salary saved by age 60
  • 10x your salary saved by age 67

If you’re on track, fantastic. If you’re late, you have some catching up to do.  If you haven’t set up a personal budget, make that the first thing you do. Once that’s in order, you’ll be able to implement the strategies below to get ready for your golden years…

1. Adjust Your Retirement Age


If you’re behind on retirement savings, you might need to delay your retirement date. “Full Retirement Age (FRA)” is the term used by Social Security to define when you can begin collecting your full retirement benefits. As of 2020, that age is:

  • 67 for people born in 1960 or after
  • 66 for people born between 1943 and 1954
  • 66 plus two to 10 months for those born between 1955 and 1959

If you claim your benefits after your FRA, they increase by 8% per year you put off retirement until your 70th birthday. If you start claiming benefits after 70, your Social Security benefits don’t increase.

Each year you stay at work and put off claiming your benefits, you increase your retirement funds in two ways: You save more money from your employment income, and your Social Security check grows.

2. Find Extra Money

Most people fall behind on their retirement savings because their income is too close to their expenses. You have a variety of options for increasing your income, including:

  • Retraining or going to school so you can qualify for a better job
  • Working with your employer for growth and promotion opportunities
  • Looking for a new employer who pays better
  • Taking on part-time work outside your regular job
  • Working a side gig like Uber driving, house-sitting, or dog-walking
  • Starting a part-time small business

You can also earn extra money in a short burst or one-time effort. Use this cash infusion to start your retirement fund or pay off high-interest debt so you can start strong in your retirement savings efforts. Some techniques for this include:

  • Holding a garage sale to declutter the house and make some extra money
  • Selling unused furniture, books, and electronics online
  • Working overtime when it’s available

In both cases, more money brought in means more money to save for retirement. Just make sure you don’t give in to temptation and splurge when you get the extra cash.

3. Start Downsizing Now

When you retire, you’re going to downsize. You’ll spend less on gas and business clothes and probably eat out less often. You might move into a smaller home or get rid of a family car. Your expense base will be lower with your new lifestyle.

Some of that downsizing won’t impact your quality of life if you do them right now, and each item will increase how much you can save toward retirement.

Start by identifying the things you will do during retirement to cut costs. Then, identify the ones you can implement before you retire. Set a schedule, then make it happen.

4. Automate Your Savings

You probably have heard the phrase “pay yourself first.” It’s good advice but sometimes hard to wrap your head around. Here’s how it works.

Most people have the following process for saving money:

  1. Get paid.
  2. Spend money.
  3. Save what’s left just before the next payday.

When you pay yourself first, you use this process:

  1. Get paid.
  2. Save the money you want to save.
  3. Get by for the rest of the pay period on what’s left.

The second method prioritizes savings and long-term financial health and helps you stick to a budget. It prevents you from splurging simply because there’s money in your checking account.

Take this one step further by automating your savings. Some employers allow you to do this as part of your direct deposit. If yours doesn’t, you can set up an automatic transfer on payday or the day after through your bank. Either way, it sets a hard limit on your spending by putting retirement savings first.

5. Follow the 50/50 Rule

The 50/50 rule is a simple way of handling money that comes in above your regular income for a month. Examples include overtime pay, bonuses from work, tax refunds, and the proceeds from selling that old couch.

Whenever you get extra money, save half of it immediately. The other half you can spend as you like. This allows you to treat yourself from time to time while still making extra progress toward your long-term financial goals.

Bonus points if you also apply this rule to any increases in your regular income. For the next raise you get, put half of that additional income toward automated savings. The rest you can use to enhance your lifestyle.

If you’re far behind on retirement progress, you might want to change this to a 75/25 rule or even a 90/10 rule.

6. Do a Savings Challenge

If you search for “savings challenge” online, you’ll find dozens of options. Each is a unique, gamified way to make progress toward financial goals. A few popular examples include:

  • The 52-week challenge, where you save $1 on the first week of the year and increase it by $1 each week until you save $52 on the last week of the year.
  • The no-spend challenge, where you commit to spend no extra money for a set period of time. Done regularly, it can add up to serious savings.
  • The $1 challenge, where at the end of each day, you put any remaining dollar bills into a savings jar.

You can find all kinds of variations on these challenges with a quick search. Pick the one you like best, then take it on.

Read “How the 10/10/10 Formula of Savings Rescues Overstretched Family Budgets”

7. Reprioritize

When many people think they don’t have money to save toward retirement, what they mean is they’re prioritizing more immediate spending over preparing to retire. This is fine when those priorities are food, shelter, and medical care. It’s less acceptable when they’re fancy coffee or compulsive online shopping.

Read “Conscious Spending: How to Live a Richer Lifestyle Without Busting Your Budget”

Spend some time looking over your expenses and find the things that aren’t as important as a healthy, comfortable retirement. Use that to tighten your budget and get started toward building the savings you need.

Final Thought

It can be daunting to look at this whole list. That’s a lot to do, and some of it might be out of your reach at the moment. Don’t worry about that. Instead, focus on one item. Make it either the easiest one for you to do or the one you think will make the most significant difference.

Once you have that well in hand and your monthly cash flow has adjusted to it, take on another. Keep doing that until you have all 7 in place. If you do one a month, you’ll get them all set up in just over half a year.

Stephen McWinter is a financial journalist in Tampa Bay, FL, who writes about retirement strategies.

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