What to Do If You're Starting Retirement Planning Late

Look, we've all been there. Life happens. Maybe you were focused on paying off student loans, raising kids, or just trying to keep your head above water financially. Now you're in your 40s or 50s, and the retirement clock is ticking louder than ever. Don't panic. While starting late isn't ideal, it's far from hopeless. Here's what you can actually do right now to get your retirement back on track.

Assess Where You Stand

Before you do anything else, you need to know exactly where you are financially. Pull out those retirement account statements you've been avoiding and take an honest look.

• Calculate your current savings across all accounts

• Figure out what you'll need based on your expected lifestyle

• Identify the gap between where you are and where you need to be

• Check if you're eligible for a pension or other benefits

This might sting a bit, but knowing your real numbers is the only way to create a realistic plan for the future.

Maximize Your Catch-Up Contributions

Here's some good news: the IRS actually gives people over 50 a break. If you're 50 or older, you can contribute extra money to your retirement accounts beyond the standard limits.

For 2024, that means an additional $7,500 to your 401(k) and an extra $1,000 to your IRA. These catch-up contributions exist specifically for people in your situation. Take full advantage of them if you possibly can. Even if you can't max them out completely, contribute as much as your budget allows.

Cut Unnecessary Expenses Now

This is where things get real. According to retirement experts, one of the most effective strategies for late starters is to practice living on less right now. Not only does this free up money for savings, but it also helps you adjust to a potentially leaner retirement lifestyle.

• Cancel subscriptions you rarely use

• Downsize your home if you have extra space

• Trade in expensive cars for more affordable options

• Cook at home more often instead of dining out

Think of it as retirement training while simultaneously boosting your savings rate.

Consider Delaying Social Security

Every year you wait to claim Social Security between the ages of 62 and 70, your benefit increases. If you claim at 62, you'll get significantly less than if you wait until your full retirement age or beyond.

Delaying until 70 can increase your monthly benefit by as much as 77% compared to claiming at 62. If you're healthy and can keep working a few extra years, this strategy alone can make a massive difference in your retirement income.

The Bottom Line

Starting late doesn't mean you're destined for a difficult retirement. It means you need to be more strategic and aggressive with your planning. Work with a financial advisor if possible, keep increasing your savings rate, and remember that every dollar you put away today is better than nothing. The worst thing you can do is throw up your hands and save nothing.