10 Strategies to Save for Retirement if You're Starting Late

Younger Americans have a major advantage when it comes to retirement: They've been warned from the start to save independently. Baby boomers, however, have the opposite experience -- much of their work history predates the 401(k), and so many went years without saving. Even Gen Xers -- arguably the first generation to have access to 401(k) plans for most of their careers -- are, for the most part, falling behind on savings.


In fact, a 2016 Transamerica study found that boomers had a median $147,000 saved for retirement, while Gen Xers had a median $69,000 saved per household. But those numbers don't tell the whole story. According to a 2015 report by the U.S. Government Accountability Office, nearly 50% of households age 55 and over have no retirement savings whatsoever. And given that workers in their 40s and 50s have a relatively limited window for amassing their nest eggs, these numbers point to a serious need for change.

The good news, however, is that there are things you can do to get your retirement savings on track, even if you're getting a later start. Here are 10 strategies to employ.


1. Pay yourself first

Many people fall behind on savings because they're just not in the habit of making it a priority. A good way to ensure that your savings don't fall by the wayside is to arrange for a portion of each paycheck to filter into a retirement plan before you get your hands on it. If you make your savings automatic, you won't miss that extra cash, and you'll eliminate the opportunities you'd otherwise have for spending it.


2. Save every raise you get

The average U.S. worker gets a 3% raise each year. If you're serious about ramping up your savings, you're better off pretending that additional money doesn't exist. Rather, send it directly to your 401(k) or use it to fund your Individual Retirement Account.


3. Work a side job

If you're already working a solid 40 hours a week, taking on a weekend gig might be the last thing you want to do. But if you're willing to push yourself for just a couple of years, you can bank that added income, invest it, and take advantage of compounding from that point forward. Say you spend two years in your early 50s pulling in an extra $20,000 from a side job. If you put that money into investments that generate an average annual return of 7%, in 15 years, you'll be looking at an additional $55,000.


4. Capitalize on 401(k) matching dollars

An estimated 92% of companies that offer a 401(k) plan also have a matching program in place. Meanwhile, the typical employer match equals 2.7% of employee pay. If you earn $60,000 a year and contribute enough to snag that match in full, you'll have an extra $1,620 coming your way -- for free.


5. Take advantage of catch-up contributions

The downside of tax-advantaged retirement plans like IRAs and 401(k)s is that they come with annual contribution limits. Most workers can only put $5,500 into an IRA each year, and $18,000 into a 401(k). But if you're 50 or older, you're allowed to make catch-up contributions that raise these limits to $6,500 and $24,000, respectively. Maxing out your 401(k) for 10 years when you're older could easily add another $240,000 to your nest egg, and that's not even counting investment growth.


6. Invest in more than one account

Though many workers struggle to max out their 401(k)s or IRAs, if you've already hit your annual limit but have money left over that you don't need for your living expenses, you do have the option to invest using a different type of account. You might, for example, consider funding an annuity, which, like a traditional IRA or 401(k), offers the benefit of tax-deferred investment growth. You might also look at a non-tax-advantaged account -- though you will pay taxes on your gains along the way, you'll also have a world of investments to choose from.


7. Take on some risk

Though stocks are a fairly risky prospect during retirement, if you still have a decade or more in the workforce, it may be time to step outside your comfort zone and load up your portfolio. As an example, a bond-heavy portfolio worth $100,000 and earning an average annual 4% return will only grow to $180,000 over 15 years. But if that portfolio were to generate an average annual return of 8%, which a stock-focused strategy could easily give you, you'd be looking at $317,000 instead.


8. Downsize

Housing is the typical American's single largest expense, but if your kids are older and no longer living under your roof, you probably don't need as much space -- in which case downsizing could free up thousands of dollars each year for retirement. Keep in mind that a smaller property will also be less costly to maintain, so in addition to a lower rent or mortgage payment, you stand to save money on upkeep and repairs.


9. Stop saving for college

Helping your children pay for college is an admirable goal, but if your limited resources are getting eaten up by tuition bills (or future tuition bills), it's time to divert those funds to your retirement plan instead. You can always borrow money for college, but you can't borrow for retirement.


10. Extend your career

A recent survey by Willis Towers Watson reveals that almost 25% of Americans expect to retire at 70 or later. While postponing retirement isn't always ideal, tacking on a few extra years of work could serve as a key last-minute savings opportunity. As an added bonus, studies have shown that working longer isn't just good for your savings -- it's also good for your health. In fact, working past age 65 might even prolong your life.

If you're behind on retirement savings, don't panic. With a little extra effort and planning, you can catch up to where you should be, and still enjoy the comfortable retirement lifestyle you're hoping for.

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Maurie Backman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.