If you are someone who got a late start saving for retirement, you may fear that it is out of reach -- especially when you hear blanket numbers of how much you should have saved by now.
But you can start saving for this milestone at any time. And if you are concerned that it's too late, these four hacks can help you catch up.
If you are eligible for a company match through your work, that could be a great way of increasing your contributions without coming up with the money yourself. With a company match, your employer will add a percentage of your income up to a maximum. So if you make $50,000 and your employer will match 6% of your contributions, they will add up to an extra $3,000 to your 401k.
That amount of money over 25 years could add up big. If you took $3,000 and earned 10% on it each year on average, in 25 years, you would have almost $325,000 in additional funds for your retirement.
Working longer or part-time could be an option for you, especially because life expectancies have increased. In 1935 when Social Security was created, the average life expectancy was 60.7 years, while in 2020, that number was 78.8.
Working longer can provide you with two main benefits. The longer you work, the fewer years you need to save for and the more time you can save money. Just maxing out your 401k and taking advantage of the catch-up provision could yield you $130,000 more in retirement savings over five years.
If you can't save enough for the retirement that you always dreamed of, you can work toward changing your idea of what your retirement looks like. Maybe now it involves moving to a city with a lower cost of living or downsizing your home so that your monthly expenses are less.
Cutting expenses can be hard, though. You can best accomplish this by creating a budget that starts with identifying what your expenses could look like in your ideal retirement. After you've done this, you can differentiate between which expenses are things that you need and which are things that you want. You don't have to give up everything that you want, but if you have a shortfall, you can either eliminate some of them or reduce your usage so that you don't risk outliving your assets.
It is never too late to start saving for retirement. But the process starts with making a plan that assesses where you are now and where you hope you will be in the future. Taking this crucial first step can help you create a roadmap that will get you closer to the retirement that you've always envisioned.