Question:
“I’m 57 years old and wondering: Is it too late to save money for retirement? When is it officially ‘too late’? I would love to feel like I still have time!”
Answer:
In an ideal world, you’d start saving for retirement with your very first paycheck and keep at it until the day you left your job. But that’s not the reality for most people. There are plenty of reasons why many Americans do not have enough saved to comfortably retire in their 60s. Perhaps you suffered a financial blow (or several), or took time off from work to be a caregiver, or sacrificed to pay for your kids’ college. Whatever your reason, the good news is that it is never too late to reinforce your retirement savings.
Start by being realistic. You probably need to revise your ideal picture of retirement and get real about what you need to do in order to have enough income to sustain you for decades to come. This could mean scaling back your lifestyle, downsizing your home, moving to a less expensive area, or working longer.
Along the way, make sure that if you don’t already have a plan, that you build one. Many people just aren’t sure how much they need to have saved. There are several free online retirement planning calculators that can help you figure out how much you need to save to support your retirement income needs. The AARP retirement calculator is a good one that allows you to make a variety of adjustments to see how you can help improve your odds of not outliving your money. Also, pull your latest Social Security statement so that you can see what percentage of your income those payments will replace.
Speaking of improving those odds, if you have any “bad debt” — like nagging high-interest credit card debt — make it a high priority to pay it off, ASAP. While debt consolidation loans are tempting, they can be riddled with fees and the application process can be a hassle. Instead, start with this handy spreadsheet to prioritize your debt and create an easy-to-follow payoff plan. You will save yourself potentially thousands of dollars that you can put into your retirement accounts instead.
Most importantly, don’t waste time on guilt and regret. Just focus on catching up. You should try saving at least 10% of your current income on a regular basis, though for people catching up closer to 15% or 20% is ideal. (We know, easier said than done.) If possible, set up a monthly automatic transfer from your banking account to a retirement account so you force yourself to save and not spend. Retirement accounts like 401(k)s and IRAs give your savings the ability to grow tax-deferred which is a big advantage.
Lastly, once you hit the big 5-0, you’re eligible to make catch-up contributions to retirement accounts, allowing you to save more than the standard annual limits. For 401(k)s, in 2025, people between the ages of 50-59 (or who are 64 and older) can contribute an additional $7,000, and those ages 60-63 can contribute an additional $11,250. For IRAs, in 2025, you can toss in an additional $1,000. These increased limits are designed to help older workers boost their retirement savings in the years leading up to retirement.
No matter where you are on your savings journey, remember that even small steps add up over time. By taking consistent action now, you’re giving your future self the gift of security and peace of mind. It’s never too late to start, and every effort you make today can bring you closer to a more comfortable, confident retirement. Stay focused, stay positive, and trust that you’re moving in the right direction!
