Catch-up Retirement Planning for Late Starters

By Net Worth Advisory Group

‍

Too often, retirement planning is seen as a multi-decade process that begins in your 20s or 30s. But life doesn’t always follow a straight line. Many people in their 40s, 50s, or even later, discover that they haven’t sufficiently prepared for their golden years.

‍

Even though there are definite challenges to starting later, it’s absolutely possible to catch up. It takes a targeted, assertive, and strategic approach, but a fulfilling retirement is still within reach.

‍

Keep reading for 10 essential steps to catch up.

‍

The Reality of Starting Late

The main obstacle for late starters is the shortened timeline. You have less time to save and less time for compound interest to grow your savings.

‍

This means in order to boost growth, you’ll likely need to save a larger percentage of your income and possibly take on a slightly more risk in your investment portfolio. It also calls for a realistic evaluation of your retirement goals. Your hopes about your ideal lifestyle, retirement age, and the amount of money you can actually save may need to be adjusted.

‍

Steps to Take NOW

If you’re playing catch-up, these 10 steps can help you make big strides toward your retirement goals, starting today.

1. Evaluate your current situation: The first step is a brutally frank assessment of your financial situation. Determine the difference between your existing savings and your anticipated retirement expenses. Take into account every possible source of income, such as Social Security, any pensions, and part-time employment. 
2. Optimize retirement account contributions: Make the most of the catch-up contributions that are available via the majority of retirement plans, including 401(k)s and IRAs. These provisions give people over age 50 the ability to make far larger contributions ($7,500 for 2025) than the typical caps, making them an effective tool for increasing savings. And in 2025, a new “super” catch-up contribution cap of $11,250 is in effect for anyone between the ages of 60 and 63.
3. Aggressively save and invest: In addition to optimizing retirement account contributions, look for ways to increase your savings rate. Find opportunities to reduce spending, even for a short time, and put the money saved for retirement into your accounts. Set up monthly automated payments from your checking account to your savings account.
4. Create a realistic retirement budget: Review your retirement goals and make a detailed budget. Keep your spending on housing, healthcare, transportation, food, and recreational activities within reasonable bounds. Add in unforeseen expenses and potential inflation.
5. Optimize your investment strategy: To make up for lost time, consider investing in a portfolio that is a little more growth-oriented, without incurring too much risk. Increasing your stock allocation may be necessary for this, but make sure to properly weigh risk and reward. Spreading your investments across several asset types to reduce possible losses is still essential. 
6. Consider working longer: Delaying your retirement for a few years can significantly increase your retirement savings. It lowers the number of years you’ll need to take money out of your savings, lets you keep making contributions to your retirement accounts, and could possibly boost your future Social Security payouts. 
7. Explore other sources of income: Consider making extra money by working part-time, doing freelance work, or renting out your home. These additional sources of income can increase your savings and act as a safety net for unanticipated expenses.   
8. Don’t ignore estate planning: Having a strong estate plan in place is crucial, even if you’re starting your retirement planning later than others. This includes creating a will, naming beneficiaries for your retirement accounts, and thinking about a power of attorney for financial and medical decisions.
9. Remain patient and disciplined: Catching up on retirement planning takes patience and discipline. If you don’t notice results right away, don’t give up. Maintain your focus, follow your plan, and periodically evaluate and modify your approach as necessary. Keep in mind that over time, even modest actions done regularly can have a big impact.
10. Seek professional advice: If you’re behind on your retirement planning, a knowledgeable financial advisor can be a huge help. They help you evaluate your current situation, create a customized investment and savings plan, and provide ongoing advice as your situation evolves.   

Reach Out for Help

While it’s not ideal to start retirement planning late in life, there’s still hope. Even if you started later than most, you can substantially increase your chances of having a comfortable retirement by acting decisively, making the most of your assets, and getting professional advice. 

‍

The key is to get started right away, maintain your commitment to your goal, and be realistic.

‍

At Net Worth Advisory Group, our mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.

‍

Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.

‍

About Net Worth Advisory Group

Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER® and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.

‍

As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER®, CFP® designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.

‍

Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.

‍