When Is It Too Late to Start Saving for Retirement?

August 18, 2023

When Is It Too Late to Start Saving for Retirement?

August 18, 2023

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As humans, there are many questions that we’re left pondering as we navigate our way through life: Why is the sky blue? Do aliens exist? What are the secret 11 herbs and spices that make KFC chicken so tasty? When is it too late to start saving for retirement?

While some of those questions may be fun to discuss while you’re hanging out with your friends on a Friday night, the latter is very important to consider. That’s because retirement planning is a crucial aspect of financial wellbeing that often requires years of consistent saving and investing. However, life doesn’t always go as planned, and many people find themselves wondering if they’ve missed the boat on saving the optimal amount of money for their retirement.

Starting early is ideal, but the truth is that it’s never too late to begin saving for retirement, though the path might be different depending on when you begin. In this post, we’ll explore the challenges and strategies for those who are starting to save for retirement later in life.

Is It Too Late to Start Planning for Retirement?

Let’s address one thing first: Starting early is better—even if it’s just a few dollars every paycheck. According to Investopedia, it’s wise to start saving for your retirement while you’re in your 20s as you finish college and being your career because “it’s easier to save for retirement when you’re young and may have fewer responsibilities.” In addition, those who start early can take advantage of compound interest.

But just because you’re not in your 20s anymore doesn’t mean that you can’t make strides toward saving for your future. While some people approaching retirement age may believe that they don’t have enough time left to build a significant nest egg, there are still ways to make an impact on your retirement savings even if you’re starting later in life.

Understand the Urgency

If you are in your 40s, 50s, or even later and haven’t begun saving for retirement, don’t panic. The first step for late starters is to acknowledge the importance of their situation. Ignoring retirement planning will not make the issue disappear; instead, it may make things even more difficult for you. Understanding and accepting the importance and urgency of retirement planning can help motivate you to take action, boost your financial literacy, find a reputable advisor, and make meaningful changes to your money habits.

Evaluate Your Needs

Do you know how much money you’ll need to retire comfortably? This is a good first step to understanding your savings requirements. Consider your lifestyle preferences, retirement dreams, projected healthcare costs, and other essential expenses (like your mortgage and grocery expenses). Is there a gap between your current savings and your desired retirement lifestyle? Calculators and financial professionals can help you determine what you’ll need and what can help you reduce or close the gap.

You may also need to consider whether adjustments to your expected retirement lifestyle might be necessary. Scaling back some plans or finding alternative ways to achieve them can help align your expectations with your savings.

Set Clear Goals

Establishing clear and realistic retirement goals is vital—especially when it feels as if time is limited. When setting your goals for retirement, consider factors such as the age you’d like to retire, estimated retirement expenses, and any potential income sources such as Social Security or pensions. By having clearly stated objectives, you can help focus your efforts and create a roadmap for achieving a comfortable retirement.

Increase Savings Rate & Contributions

Late starters may need to be more aggressive with the rate at which they’re adding to their retirement savings. Since you’ll have less time to save, it’s essential to allocate a larger portion of income to retirement savings. Here are some approaches to increasing your retirement savings rate:

  • Budgeting: Create a detailed budget to track your income and expenses, and identity where you can cut back on necessary spending.
  • Automate savings: Set up automatic transfers from your paycheck to a retirement savings account to ensure consistent contributions.
  • Increase contributions: Regularly increase the percentage of your income that you contribute to retirement accounts, such as 401(k)s or IRAs.
  • Take advantage of employer benefits: If your employer offers a matching contribution to your retirement account, contribute enough to maximize this benefit.
  • Reevaluate your lifestyle: As your income increases, avoid spending too much too quickly, and maintain a disciplined savings approach.

Take Advantage of Catch-Up Contributions

Catch-up contributions refer to additional contributions that individuals aged 50 and older can make to certain retirement accounts, such as IRAs and 401(k)s. These contributions are allowed above and beyond the regular annual contribution limits set by the IRS. The catch-up contribution limits are higher for older individuals to help them boost their retirement savings as they approach retirement age. The specific limits may change annually and depend on the type of retirement accounts you have. Ask your advisor if your retirement account is eligible for catch-up contributions so that you can maximize your retirement account growth.

Delay Retirement or Wait Until Full Retirement Age

For those who feel comfortable extending their working years, delaying retirement can significantly impact their financial security. Working a few extra years allows for more time to save, reduces the number of years funds need to last in retirement, and potentially increases Social Security benefits. For example, you may be eligible to retire at age 62, but that doesn’t necessarily mean 62 is your full retirement age per Social Security.

Visit the Social Security Administration website here to find out your full retirement age so that you can plan accordingly and reap your full Social Security benefits.

Explore Investment Opportunities & Other Income Sources

Late starters may need to adjust their investment approach to balance growth potential with risk tolerance. While it’s important to make investments that can generate higher returns, it’s equally vital to protect your existing savings. This can be done by diversifying your portfolio. Working with an advisor can help you tailor a strategy suitable for your circumstances, lifestyle, and retirement goals.

Consider other income sources like annuities or rental income. Using your home equity could unlock additional income and even be a beneficial option for some. Diversifying your income can alleviate pressure on your savings.

Reduce Debt and/or Living Costs

Debt can be a significant hindrance to saving for retirement, especially when you’re getting closer to your retirement age. Prioritize paying off high-interest debts, such as credit cards and personal loans. Reducing debt not only frees up more funds for retirement savings but can also help provide greater financial flexibility when you’re retired.

Consider ways to reduce your living costs—for example, moving to a smaller home or a more affordable area or reducing discretionary spending. Big and small changes in your lifestyle can free up funds so that you can be more aggressive with saving for retirement.

It’s natural to feel concerned if you’re starting late on your retirement savings journey. However, fear shouldn’t paralyze you from taking action. By assessing your situation and making a strategic plan, it’s entirely possible to secure a comfortable retirement.

While saving for retirement early in your life and career is ideal and beneficial, it’s never too late to start saving. What’s essential is to approach the situation with a clear plan, determination, and possibly professional guidance. Remember: Every small step towards saving for retirement counts, and a secure retirement is within reach with careful planning and dedication.

  • If you’re starting early, leverage compounding, employer plans, and investment flexibility.
  • For midlife starters, understand the gap, save aggressively, and reevaluate lifestyle expectations.
  • Late starters should utilize all available resources, including Social Security, continued employment, home equity, and suitable investment strategies.

If you need help with your retirement planning, you’re not alone. The Liberty Group team is here to help answer your questions. Contact us here today to learn more.


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This blog expresses the author’s views as of the date indicated, are subject to change without notice, and may not be updated. The information contained within is believed to be from reliable sources. However, its accurateness, completeness, and the opinions based thereon by the author are not guaranteed – no responsibility is assumed for omissions or errors.  This blog aims to expose you to ideas and financial vehicles that may help you work towards your financial goals. No promises or guarantees are made that you will accomplish such goals.

Past performance is no guarantee of future results, and any expected returns or hypothetical projections may not reflect actual future performance or outcomes. All investments involve risk and may lose money. Nothing in this document should be construed as investment, tax, financial, accounting, or legal advice. Each prospective investor must evaluate and investigate any investments considered or any investment strategies or recommendations described herein (including the risks and merits thereof), seek professional advice for their particular circumstances, and inform themselves about the tax or other consequences of any investments or services considered.

Investment advisory services are offered through Liberty Wealth Management, LLC (“LWM”), DBA Liberty Group, an SEC-registered investment adviser.  For additional information on LWM or its investment professionals, please visit www.adviserinfo.sec.gov  or contact us directly at 411 30th Street, 2nd Floor, Oakland, CA  94609, T: 510-658-1880, F: 510-658-1886,  www.libertygroupllc.com. Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training.


IRS. (n.d.). Retirement Topics – Catch-Up Contributions. IRS. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions

Richmond, Steven. (April 2, 2023). Why Save for Retirement in Your 20s? Investopedia. https://www.investopedia.com/articles/personal-finance/040315/why-save-retirement-your-20s.asp

Smith, Liz. (February 4, 2023). All About Catch-Up Contributions. SmartAsset. https://smartasset.com/retirement/all-about-catch-up-contributions

Social Security Administration. (n.d.). Starting Your Retirement Benefits Early. Social Security Administration. https://www.ssa.gov/benefits/retirement/planner/agereduction.html