How to Catch Up on Retirement Savings?: [Tips for Late Starters]

In this video, we’re looking at a few proven strategies to catch up on retirement savings – no matter where you are in your savings journey. Plus, we’re sharing ways to come up with the money for these strategies.

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The #1 way to get caught up – and that is to increase your contribution limits and if you’re over 50, take advantage of the catch up contributions.

The best way to catch up is to max out your contributions. This is easier if you only have an IRA. For 2023, you can contribute $6,500 in 2023. And if you’re over 50, you can put in an additional $1,000 for a total of $7500.

For those with 401k, it might be a bit harder to max contributions – it depends on how much you make and how much you can realistically contribute. This year you can contribute up to $22,500 for a 401k and if you’re over 50, you can put in an additional $7,500 – for a total of $30,000.

Tip 2: Don't prioritize saving for your child's education over your retirement savings.

Tip 3: Open a Roth IRA. It’s no secret to those who watch our videos that I love the Roth IRA. With a Roth IRA, contributions are non-tax deductible, but withdrawals are tax-free in retirement. Try to max this out, after you hit your 401k max contributions. Yes, it is a lot, but this is your retirement.

Tip 4: To find the extra income to increase your retirement contributions whether it’s in an IRA or 401k you may need to make some tough choices. You may need to make major lifestyle changes – like re-evaluating your housing situation. If you are spending too much on housing, it could make it impossible to save money for your future.

Focus on increasing their income to get caught up while cutting back. Doing this can make a significant difference in how much you can save quickly. Consider getting a part-time job or exploring other opportunities to earn extra money, like a side-hustle.

Tip 5: Get professional help. Working with a financial advisor to get a better sense of what you need and to help you get a plan together might be worth it. They can help make recommendations based on your current situation and get you on track.