Late to Retirement Planning? 7 Strategies to Help You Catch Up to Your Peers

Life happens. Divorce, job loss, debt, and illness can all get in the way of saving for retirement like you'd like to. It doesn't help when everyone around you seems to be so much further ahead. All that matters at this point is that you do everything you can to get caught up.

While it would be nice to catch up with your peers, what really matters is saving enough to know you can live comfortably in retirement. Turn that discouragement you're feeling into determination and get started. Here's how.

Image source: Getty Images.

1. Set a "goal budget"

So what if your buddy has $1 million in a 401(k), $500,000 in an IRA, and expects to inherit a bundle from his wealthy parents? He may need that much money to fund his lifestyle. What you need to do is decide how much you'll need to fund your lifestyle.

What would you like to do in retirement? Do you want to hang around at home and work on hobbies, travel the world, or a little of both? If you haven't already, create a post-retirement budget. It doesn't have to be exact; you can spitball here.

Add your usual living expenses, like housing, utilities, groceries, transportation, healthcare expenses, and money you'd like to spend on doing fun things. Now, add in money for your big dreams. For example, if you've always wanted a classic car to restore or to open a small business, include those expenses.

2. Figure out where you stand

Add together all expected sources of retirement income. This includes Social Security, any pensions you may receive, income from rental property, annuities, royalties, or a part-time job. If you plan on selling your home, land, or another item of value, you can factor that in here, too.

Now, compare your expected income with your goal budget. If there's a gap, you know how much money you need to make up.

3. Delay the big day

No one likes to hear this, but since you're trying to catch up, you may need to work until age 70. If that feels ancient to you, it's not. 70 is the new 50 (I just made that up, but it feels true). Stay active and healthy and enjoy the process. After all, working longer has its advantages.

For one thing, working until 70 means collecting your maximum Social Security benefit each month, an amount that's 24% to 32% higher than it would be if you retired early.

Here are some of the other advantages of working until 70:

• Allows compound interest to work its magic, giving your retirement plan more time to grow.
• Cuts a few years off how long your retirement savings needs to last.
• Working longer helps you stay social and engages your brain.
• According to a study in the Journal of Epidemiology, working even one year beyond full retirement age (around 67 for most people) is associated with a 9% to 11% lower risk of dying.

4. Maximize tax-advantaged retirement accounts

Putting money into a tax-advantaged account -- like a traditional IRA, 401(k) plan, or health savings account (HSA) -- not only helps you build a retirement fund, but it also cuts the amount of taxes you must pay now.

If you're waiting to feel as if you can "afford" to contribute money, that day is unlikely to arrive. Instead, turn your budget upside down to find the cash you need to get started, even if it's only with 2% of your salary. You can increase your contributions annually. Don't forget, since you're paying less in income taxes when you contribute to a tax-advantaged account, you won't be out as much money as you imagine.

And for the love of everything good, take advantage of the "free money" offered by an employer who matches employee contributions. Let's say you earn $60,000 annually and your employer offers to match 3% of your contributions. If you contribute 3% to capture that match, your pre-tax contribution would be $1,800, and your employer would add another $1,800.

5. Meet with a financial advisor, even if it's only once

You may feel as though you don't have enough money to meet with a financial advisor, but that's not true. Look for an advisor who charges by the hour to offer advice, review your budget, and help you come up with a way to maximize your efforts.

A financial advisor can also look at how your tax-advantaged funds are invested. Depending on your age, they may advise you to invest more aggressively to catch up faster. They can also help you determine the right "balance" for your portfolio.

6. Automate savings

Anyone who's ever had to play catch-up will tell you that it's easier to do so when you automate. Automate everything, from your retirement fund contributions to monthly bills. That way, you can focus more on earning the money. You don't have to worry about missing a payment, getting hit with late fees, or forgetting to contribute to your IRA (or other retirement account).

7. Come up with creative cost-cutting measures

You know that paying off high-interest debt frees up money and that cutting subscription services you no longer need will leave more money in the bank each month, but here are some other quick and easy ideas:

• Prepare meals in bulk to save time and money.
• Buy next year's holiday gifts at the end of the season when the discounts are deepest.
• Download mobile apps that can help you save money on everything from groceries to home goods.
• Contact your internet, cable, and other utility providers to negotiate better rates.
• Shop for new home and auto insurance. It really can save you hundreds of dollars a year.

There's nothing simple about getting started, but once you do, it's like learning to ride a bike or ski. After a while, it feels natural.

The Motley Fool has a disclosure policy.