It’s Not Too Late to Save for Retirement: Five Ways to Step It Up

You’re not alone if you feel like time is running out for you to save, but taking advantage of workplace benefits, increasing the percentage of what you save and more can help.

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Time is one of your greatest assets or your worst enemy when planning for retirement.

The earlier you start saving for retirement, the more time that money has to grow. That means you have to save fewer dollars earlier in order to achieve your financial goals later.

But many people feel like time is running out for them to save. The majority of Americans (66%) worry that if they don’t increase their retirement savings soon, it will be too late for them to have a comfortable retirement, according to the latest Quarterly Market Perceptions Study* from Allianz Life Insurance Company of North America. This is up from 61% last year.

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In particular, Millennials and Gen X are starting to hear the retirement clock ticking. While 76% of Millennials and 73% of Gen X said they worry about increasing savings soon for a comfortable retirement, just 48% of Baby Boomers said the same.

A lack of savings presents risks to your retirement — either not enjoying any comforts or, even more dire, running out of money. This risk is one of many people’s greatest fears about retirement. It is never really too late for you to increase savings and plan for retirement, unless you have already retired. Here are five ways to step up your retirement savings today.

1. Take advantage of all benefits through your employer.

Your employer likely has benefits to encourage you to save for retirement. Many employers offer to match contributions employees make to their 401(k) plans. A simple step to increase your savings is to make sure you are contributing enough to get the full match. Not contributing enough to get the full match is leaving free money behind!

Some employers also offer programs to help employees receive matching funds without hitting the contribution threshold. For example, starting in 2024, a provision in the SECURE 2.0 Act will allow for employers to match contributions to retirement savings for the amount employees pay back in student loans.

2. Increase savings by 1%.

The best way to have more in savings is to, well, save more. A good strategy is to increase your contributions to retirement savings accounts by 1 percentage point every year. Over time, this increase to your savings will add up, but it won’t feel like a major bite out of your budget.

3. Convert savings into a Roth IRA.

If you’re worried about having enough saved for retirement, you’ll want to find ways to mitigate risks like taxes. One way to control taxes is to convert savings into a Roth IRA.

A large portion of retirement savings is done in tax-deferred accounts like a 401(k) or IRA. But taxes are inevitable. Taxes will be due when you start withdrawing from those accounts to fund your retirement. Converting those funds into a Roth account and paying taxes now can help lower your taxes and increase your retirement nest egg.

Please remember that converting an employer plan account to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences, including (but not limited to) a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax adviser before making any decisions regarding your IRA.

This conversion can be done in various ways. Some choose to convert to an entire IRA all at once or spread it out over years. It may also make sense to perform conversions over multiple tax years to avoid entering a higher tax bracket. Also, if your employer offers a Roth 401(k) or other Roth options, take advantage of that for possible tax-free withdrawals later on. SECURE 2.0 now allows employers to match Roth contributions in Roth plans as well.

4. Consider where you will retire.

Your take-home retirement income will vary based on where you live. If you worry about stretching your savings, living in a low-tax state could help. Eight states in the United States have no income taxes — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. These states don’t tax wages, salaries, dividends, interest or any sort of income, including Social Security benefits. (New Hampshire also doesn’t tax wages and salaries and will stop taxing interest and dividends in 2027.)

5. Make catch-up contributions.

If you are 50 or older, the IRS allows you to contribute additional money to 401(k) and IRAs above the standard limit. This can help increase your savings in tax-advantaged accounts.

Total 401(k) contributions are capped at $66,000 in 2023 (this includes contributions made by an employee and the employer). Another $7,500 in contributions are allowed for people over 50. That brings total 401(k) contributions with catch-ups to $73,500 in 2023. For IRAs, people over 50 can make $1,000 in IRA catch-up contributions every year for a total contribution of $7,500 in 2023. Starting in 2024, there will be an increase in the limit on catch-up contributions for people age 60 to 63 that will be the greater of $5,000 or 150% of the regular catch-up amount in 2025.

Many people are often in their highest-earning years toward the end of their careers and may have more money to set aside for retirement. Making catch-up contributions can help make up for lower savings rates in your younger years.

Seek professional guidance for help with making a plan

A financial professional will be able to help establish a plan for your retirement. With their guidance, you will be able to create a retirement strategy tailored to you and your financial situation. This plan will include ways to mitigate risks to retirement like inflation, longevity and market volatility. It is best to write down this plan. That way, you have something to reference when feeling anxious about your preparation or factors outside of your control.

While a written plan is helpful at all stages of life, you should document your strategy for retirement by age 55.

*Allianz Life conducted an online survey, the 2023 1Q Quarterly Market Perceptions Study in March 2023 with a nationally representative sample of 1,005 respondents age 18+.

This material is intended for informational purposes only. It should not be considered an offer of any product. You can use a variety of funding vehicles to plan for your retirement. You should consult your financial professional to help you determine what is most suitable for your individual needs.

Products are issued by Allianz Life Insurance Company of North America.

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Kelly LaVigne, J.D.
Vice President, Advanced Markets, Allianz Life

Kelly LaVigne is vice president of advanced markets for Allianz Life Insurance Co., where he is responsible for the development of programs that assist financial professionals in serving clients with retirement, estate planning and tax-related strategies.