Maximizing Your Retirement Savings: Strategies for Late Starters

As a baby boomer, you may find yourself approaching retirement with less savings than you'd hoped. Whether due to economic fluctuations, personal circumstances, or simply the demands of life, many late starters face this challenge. However, it’s never too late to take action. Here are effective strategies to maximize your retirement savings and catch up on your financial goals. 

1. Assess Your Current Financial Situation 

Start by taking a comprehensive look at your finances. Calculate your net worth by subtracting your liabilities from your assets. Understand where you stand regarding retirement savings, debts, and other financial obligations. This assessment will provide a clear picture of your financial health and help you set realistic goals. 

2. Create a Realistic Budget 

Budgeting is crucial for anyone looking to save more, especially late starters. Track your income and expenses to identify areas where you can cut back. Consider the 50/30/20 rule: allocate 50% of your income to necessities, 30% to discretionary spending, and 20% to savings. This will help you redirect funds towards your retirement savings without drastically altering your lifestyle. 

3. Maximize Contributions to Retirement Accounts 

Take full advantage of retirement accounts like 401(k)s and IRAs. If your employer offers a matching contribution, aim to contribute at least enough to receive the full match—it's essentially free money. For 2025, you can contribute up to $23,500 to a 401(k) or $7,000 to an IRA. Maxing out these contributions can significantly boost your savings over time. 

4. Explore Catch-Up Contributions 

If you’re age 50 or older, you’re eligible for catch-up contributions, which allow you to contribute extra amounts to your retirement accounts. For 401(k)s, you can add an additional $7,500, while IRAs allow for an extra $1,000. This is a powerful way to increase your savings as you near retirement. 

5. Diversify Your Investments 

Investment diversification is essential for managing risk and optimizing growth. As you age, consider adjusting your asset allocation to include a mix of stocks, bonds, and other investments. While you may want to lean towards more conservative investments as retirement approaches, having a portion of your portfolio in growth-oriented assets can help offset inflation and increase your savings over time. 

6. Consider Part-Time Work or Side Gigs 

If your current income isn’t sufficient to boost your retirement savings, consider part-time work or side gigs. This can provide extra cash flow that you can funnel directly into your retirement accounts. Freelancing, consulting, or even seasonal work can be excellent ways to earn additional income while allowing you to maintain flexibility. 

7. Reduce Debt 

Reducing or eliminating debt should be a priority, especially high-interest debt like credit cards. The more you can reduce your liabilities, the more you can allocate towards savings. Consider strategies such as the snowball or avalanche method to pay down debt systematically, freeing up more cash for your retirement. 

8. Stay Informed About Social Security Benefits 

Understanding Social Security benefits is crucial for retirement planning. If you're behind on savings, your Social Security income may play a larger role in your retirement strategy. Consider factors such as the optimal age to begin receiving benefits and how working longer can affect your benefits. Delaying benefits can lead to higher monthly payouts, which can significantly impact your overall retirement income. 

9. Consult a Financial Advisor 

Navigating retirement planning can be complex, especially if you’re a late starter. A financial advisor can help you create a personalized retirement strategy, considering your unique circumstances, risk tolerance, and goals. They can provide valuable insights on investment options, tax strategies, and how to maximize your retirement income. 

It’s Never Too Late to Start Saving 

While starting late may feel daunting, there are numerous strategies available to help you catch up on your retirement savings. By assessing your financial situation, maximizing contributions, and making informed decisions, you can build a more secure financial future. Remember, the sooner you start taking action, the more time your savings have to grow. 

Ready to Boost Your Retirement Savings? 

Contact our office today to speak with an advisor who can help you create a personalized tax-optimized retirement strategy. Let us guide you toward maximizing your retirement savings and achieving your financial goals. 

Squire Investment Management Company, LLC (“Squire”) is an investment adviser registered with the United States Securities & Exchange Commission. Registration as an investment adviser does not indicate any level of skill or training. This document was created for informational purposes only and serves as general market commentary; it does not constitute investment advice, nor is it intended as an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors. All data or other information referenced herein is from sources believed to be reliable; however, Squire cannot guarantee the accuracy of information obtained from third parties. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.