Late to the Retirement Savings Party? Five Tips for 2025

Original By: Donna Fuscaldo at Kiplinger.com 03/19/25
Summarized By: PV Financial on 03/25/25

Whether you’re struggling to save or have other priorities, there are always ways to start saving for retirement. If you feel like you’re behind on your retirement savings, here are some steps you can take to get started:

1. Maximize Retirement Contributions

Start by building your retirement savings with catch-up contributions. If you work for a company that offers a 401(k) match, contribute as soon as possible to take full advantage of this benefit. Aim to save at least as much as your company matches, as this is essentially free money. If you’re 50 years or older, take advantage of catch-up provisions that allow you to contribute even more to your retirement accounts, helping you get back on track.

2. Diversify Your Investments

In addition to your 401(k), consider investing in other tax-advantaged accounts like an IRA, or explore low-cost investment options such as exchange-traded funds (ETFs) or index mutual funds. You can also invest in stocks and bonds, but make sure to balance your risk levels and consider tax implications when making investment decisions.

3. Commit to Working Longer

The longer you work, the more you can contribute to your retirement savings. Extended work years also give your savings more time to grow. For example, there’s a significant difference between saving for 10 years versus 15 years. If you’re able, consider working longer to allow your investments to grow and increase your retirement savings.

4. Automate Your Savings

An easy way to start building your retirement savings is to make your savings automatic. Set up a direct deposit from your paycheck into a retirement account or savings account. By doing this, saving becomes a seamless part of your routine, and you won’t have to worry about forgetting to contribute. It’s an easy way to make progress without actively thinking about it.

5. Cut Back on Expenses

A more challenging yet effective way to boost your savings is by cutting unnecessary expenses. Start by reevaluating your budget so that you’re only spending on essentials. A good approach is the 50-30-20 rule: allocate 50% of your income to essentials (bills, utilities, food), 30% to discretionary spending (vacations, leisure), and 20% to savings (retirement or emergency funds). Cutting back on non-essential spending may require adjusting your lifestyle, but it can make a significant difference in your savings.

6. Find Hidden Savings

Look for areas in your spending where you can cut back. You might be surprised by how much you can save without needing to increase your income. For example, consider reviewing your subscriptions (e.g., streaming services, phone bills, cable) and cutting out those you don’t need. Additionally, assess your insurance coverage, such as home or auto insurance, to ensure you’re not paying for more coverage than necessary. Ask yourself if you’re paying for services or features you don’t use.

7. Resist the Urge to Spend

One of the most difficult habits to break is the urge to spend any extra cash you come across. Instead of spending it, put it toward your retirement savings, investments, or emergency fund. The more you contribute, the more you’ll have in the long run.

8. Be Cautious About Relying on Your Home’s Value

Many people hope to live off the proceeds from selling their house once they retire, but this strategy can be risky. The housing market is unpredictable, and your home might not sell for as much as you expect. Additionally, if you plan to downsize, you may face challenges in finding an affordable place to move. Make sure to carefully consider whether this strategy will provide enough funds for your retirement lifestyle and relocation costs.

9. Don’t Procrastinate

Perhaps the most important point is not to procrastinate. The biggest mistake people make is waiting too long to start saving. Time is money, and the sooner you start saving, the better.

Conclusion

If you feel behind on your retirement savings, don’t despair. Whether you’ve struggled to save or had other priorities, it’s never too late to start. By taking small steps today, you can set yourself up for a more secure financial future.

Source: https://www.kiplinger.com/retirement/late-to-the-retirement-savings-party

Only contents distributed during the individual’s affiliation with Raymond James have been approved and retained by Raymond James. Posting outside of Raymond James affiliation were not made on behalf of and do not promote Raymond James.