Late to the retirement savings party? Feeling bad because you set aside little cash last year? Don’t despair. Whether you have a good salary or only a few pennies to spare, there are ways to tweak your retirement plan that will beef up your nest egg.
“No one should feel bad about not saving; everyone has different financial goals at different stages of life,” says Emily Irwin, head of Wells Fargo’s advice center. “Maybe you had a career trajectory that didn’t enable you to contribute to your retirement in your 20s or 30s, or maybe you prioritized paying off student debt or making a down payment on a home and the home appreciated in value. Those are still good dollars spent.”
However, now is the time to focus on saving for retirement, which can easily last more than twenty years.
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Financial pros say you need to save 15% of your annual salary each year to maintain your lifestyle in retirement. That’s a hefty amount, especially if you are late for the savings party.
The good news is that whether you’ve struggled to save or had other priorities that took precedence, there are ways to get started saving for retirement. Here’s how.
1. Build retirement savings with catch up contributions
If you have a company-sponsored retirement savings plan such as a 401(k) and haven’t been contributing or have only amassed a paltry sum, now is the time to change that.
For 2025, workers under 50 may contribute a maximum of $23,500 to their 401(k). If you can't save that much, at the very least, try to contribute as much as your company's match if one is offered. If you don’t, you're leaving free money on the table.
Let’s say your company matches 100% of your contributions up to 5% of your salary. If you earn $70,000 a year and contribute 5% of your salary or $3,500 to your 401(K) the total contributions will be $7,000 with the company match.
Over ten years, assuming an average annual return of 7%, that would amount to $105,824. The good news: most companies that have a 401(K) offer some form of a match. In 2024, the average 401(k) match was between 4% and 6% of pay, according to investment platform Carry.
If you are 50+, taking advantage of catch-up provisions can quickly boost your nest egg. For 2025, savers over aged 50 can contribute as much as $31,000 to their 401(k). If you are between the ages of 60 and 63, you can contribute $11,250 in "super catch-up" contributions for a total allowable contribution of $34,750/
“It’s the best way to start saving,” says Bill Van Sant, managing director at Girard, a Univest Wealth Division. “It's easier to stick to because it's coming out of your paycheck. Your budget gets used to it.”
Beyond maxing out your 401(k), a quick way to increase your retirement savings is to invest in other tax-advantaged or potentially low-fee vehicles such as an IRA, ETF or index mutual fund.
Van Sant says to consider investing in stocks and bonds, balancing risk and tax implications. Van Sant pointed to an annuity as an option for individuals wanting to shelter a sizable income.
To understand how your savings compare to others in your generation, check out the average 401(k) balance by age and the average IRA balance by age. You may not be as far behind the pack as you think.
2. Commit to working longer
You may have an ideal age in your head when you plan to retire, but adding a few years to that can give you more time to save.
Consider the power of compounding, and your nest egg will thank you the longer you work. Plus it gives you more time to pay down any debt and tie up loose ends.
“If retirement is coming in the next ten to 15 years, commit to staying in the workplace for fifteen years,” says Christopher R. Manske, a certified financial planner and president of Manske Wealth Management. “That’s a big difference from ten to fifteen years and by continuing to save for those last five years, you’ve made a big step in the right direction.”
3. Make your savings automatic
Whether you are saving more in the bank or in an investment account, take yourself out of the equation by making the savings automatic.
If the savings is automatically deducted from your paycheck or your bank account the less likely you are to miss it. It’s easy to live off of less if you don’t see it first.
“The first rule of saving is to save automatically,” says Rob Conzo, CEO and managing director of The Wealth Alliance. “You should be saving until you feel it a little bit.”
4. Cut your expenses
The start of the new year is the perfect time to reset your budget and overhaul your spending to save money, such as with the 50-30-20 budget rule.
To do that, write down all your expenses and find areas to cut back. “I cannot stress enough the power and importance of spending less money. Look at what you spend and make different choices,” says Manske.
Ask yourself why you are tight on cash flow and adjust your lifestyle. It could be something as small as giving up the pricey coffee or as big as downsizing. “You can save, but you can’t do it living the same way you’ve been living. It’s time to change and it starts with the budget,” says Manske.
Speaking of expenses, investment fees could put your retirement at risk. Paying the median management fee of 1.9% would delay retirement by four years.
So include fund expense ratios, investment management and similar fees in your list of expenses that might reduced.
5. Find hidden savings
If you’ve slashed your budget and overhauled your lifestyle but still can’t save, it’s time to find hidden areas you may have missed.
Your insurance is a good place to start. If you haven't shopped for auto insurance or homeowners insurance recently, do so. You may be able to save on your monthly premiums. At the very least, review your coverage. You may be paying for something you don’t need.
The same goes for your phone bill, cable, internet or streaming service. There may be cheaper options available.
Also, make sure you aren’t paying for subscriptions you no longer use or paying double for the same streaming service. By finding hidden pockets of savings, you can “generate extra chunks of money without making money,” says Van Sant.
6. Throw extra money to your savings
Whether it's a tax refund or a year-end bonus, spending it on a vacation or a new wardrobe may be tempting, but resist those urges. The better option is to allocate that to your retirement savings account.
If you have an IRA and haven’t met the contribution limit, you can allocate the refund there. For 2025 you can contribute $7,000 to an IRA. If you are 50 or older, you can contribute an extra $1,000. The more money you have in accounts like an IRA, the greater you’ll benefit from compounding.
You can also use it to increase your contribution percentage to your 401(k) or save it in your emergency fund. Some 401(k) plans will even let you contribute after-tax dollars that are not deducted from your paycheck before taxes. Check with your plan administrator to see if it’s allowable.
According to Vanguard’s How America Saves Report for 2024, 22% of Vanguard plans allowed after-tax contributions. About 9% of employees took advantage of this feature and skewed wealthier.
7. Tap your house ... carefully
For some people, their home is their only savings; once they retire, they plan to sell the home and live off the proceeds. That scenario could work out if the house has appreciated or the mortgage is paid off and they move to a cheaper location for retirees.
It is a strategy fraught with risks. For starters, you are beholden to the real estate market. In a down market, selling your home may be difficult, or you may not get the price you want.
Plus, if you do sell, you may have to give up on a dream location if it's just as expensive as your current location.
“If that’s your plan, you have to remember you can't control the real estate market,” says Irwin. “You have to be careful, plan and be open to holding on to it longer.” Irwin says to research your coveted location early and often, at least five years before you want to retire to ensure you can truly afford to downsize.
8. Don't procrastinate
The worst thing you can do is put off saving for another year. Even if you set aside $50 a month for your retirement, that's better than nothing.
“Procrastinating on saving usually means that you’re spending everything. It’s rare that someone is putting off saving and therefore their checking account just keeps getting bigger and bigger,” says Manske. “Make saving be like a bill that you automatically pay once or twice a month.”
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