Retirement Strategies For Late Starters

June 07, 2016 By Richard Poulson

At Cook Martin, an accounting firm in Utah many people come to us wondering if they can still get enough retirement savings even if they start late. If this is you, you’re not alone. Many people don’t manage to start a real retirement strategy until they’re older, and consequently aren't able to take advantage of the full power of compounding interest.



And the answer is yes, there’s still time. Here are some helpful financial strategies you can take to start catching up.

Start Saving

This is an obvious point but an important one. If you’re a late starter on saving for retirement, then you need to take extra efforts to start now.

Consider downsizing your home, or switching your vehicle for a more efficient option. Look for ways to make small changes to your life that amount to significant savings in the long term.

Most importantly, don’t take on any more debt.

Take Advantage of Catch-Up Contributions

If you’re over 50, now is the time to make the most of what you can contribute to your employer-based retirement plan. Depending on the type of retirement fund you have, you may be able to make “catch-up contributions” to boost your retirement savings.

401(k) plans, 403(b) accounts and 457(b) have a catch-up contribution limit of $6,000 for people 50 or older in 2015, on top of the $18,000 annual limit. Traditional or Roth IRAs also allow you to save additional funds. If you have a SIMPLE plan, you can add an extra $2,500, but SEP IRAs don’t allow catch-up contributions.

Delay Receiving Social Security

Even if you have an employee-based retirement plan, Social Security is still considered the best kind of retirement income.

For one, it’s adjusted for inflation and guaranteed by the federal government. So the longer you put off collecting it, the more benefit you can get from the system. Age 70 is the maximum, but make a decision that makes the most sense for you and your family. It’s usually late retirement savers who get the most advantage of putting off claiming social security.

Start Making Smart Investments

If you’re planning to make investments as a retirement strategy and you’re over 50, don’t make the mistake of becoming overly aggressive.

You have less time to build a valuable portfolio out of your nest egg, but that’s no reason to gamble what savings you do have on risky investments. Even if you have a small amount of savings, wise investments can help it grow a lot over just a few years.

Speculative investments run too much risk of losing everything.

That said, late starters should also avoid overly conservative investments in money market vehicles. You want to protect what finances you do have but won’t see a valuable return on investment if you stick with small gains that are eroded by inflation over time anyway.

Scale Into Retirement

If you’re just getting started with retirement savings, you might seriously consider working a few years longer than you normally intended.

You can ask your employer to reduce your hours so you can spend more years earning income. Or you can enter retirement and add on a part-time job for a few years.

With the growth of on-demand services and the gig economy, there are also many piecemeal ways to earn extra cash throughout retirement.


Following these strategies will help you compile the savings you will need for retirement. Late starters can catch up when you follow the steps outlined above. The best time to start is now.

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