Late to Retirement Planning? 5 Strategies to Help You Catch Up to Your Peers

Key Points

• Take advantage of your 401(k) match and catch-up contributions if you're able to.

• A reverse mortgage could be an option for seniors with substantial equity in their homes.

• Phased retirement might be your best strategy if you're really struggling to save.

You're no longer a 20-something still getting used to a full-time job. You've been around for a while, maybe moved a couple of rungs up the corporate ladder, and retirement no longer feels so far away. This would be a good thing, except you got off to a late start with retirement planning and now you're worried you won't be able to afford to retire.

While there's no way around the high cost of retirement, there are some strategies you can try to build your savings more quickly. Applied diligently, they may be enough to help you catch up to your peers who began saving for retirement decades ago.

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1. Claim your 401(k) match whenever possible

Your 401(k) match is essentially a bonus your employer gives you for saving for your retirement. If you don't claim it by the end of the year, you lose your chance to earn that money. So this should be your top priority after paying your monthly bills.

If you're not sure how your company's 401(k) match works, ask the human resources department. Some companies give you a 100% match on up to a certain percentage of your income. Others only give you a 50% match up to a percentage of your income.

Once you know how much you have to set aside to get your full match, divide this by the number of pay periods left in the year. Try to set aside at least this much if you're able to.

2. Take advantage of catch-up contributions if eligible

Workers 50 and older are eligible to make catch-up contributions to their retirement accounts -- additional contributions beyond the standard limits. In 2025, adults younger than 50 can contribute $7,000 to an IRA and $23,500 to a 401(k). Adults 50 and older can set aside up to $8,000 and $31,000, respectively.

A new law going into effect this year also introduced an extra 401(k) catch-up contribution for those aged 60 to 63 beginning this year. These workers can save up to $34,750 in a 401(k) in 2025.

Obviously, saving that much requires a lot of extra cash and may not be feasible for you. But if you have extra money to spare, catch-up contributions could be one of the best ways to close the gap between what you have and what you need for retirement. Keep in mind that annual contribution limits can increase over time, so you may be able to set aside even more in the future.

3. Put extra money toward retirement savings

If your expenses consume most or all of your paychecks, you may need to look toward alternative income sources to boost your retirement savings. This could include tax refunds or year-end bonuses. Direct all of that money to an IRA or defer an amount equal to your bonus or refund from your next paycheck into your 401(k) and use the bonus or refund to cover your living costs.

You could also consider starting a side hustle to make a little extra money. Normally, you'd owe income taxes on your earnings, but if you put them into a tax-deferred retirement account, like a traditional IRA or 401(k), you won't have to worry about paying taxes on them until you withdraw them later.

4. Tap your home equity

If you're a homeowner with substantial equity in your home, you could consider a reverse mortgage to help you cover some of your retirement costs. These are only available to homeowners 62 or older, and they don't require you to repay any of the loan while you're living in the home.

However, you won't be able to borrow up to the full value of your home, and if you move out, the entire balance will come due. If you live in the home until you pass away, your estate or your heirs will have to pay off the reverse mortgage if they wish to keep the property.

Because you're putting your home on the line, it's important to think through this option carefully. Talk with a lender and make sure you understand all the terms to decide whether it's the right move for you.

5. Consider a phased retirement

Though it may not be ideal, phased retirement might be your best option if you're struggling to save as much as you'd like. This is where you gradually reduce your hours in the workforce rather than retiring all at once. It may mean working longer than you originally planned to, but it'll give you access to a steady paycheck for longer to supplement your personal savings.

You don't have to remain at your current job forever either. You're free to choose something that's more flexible and in line with your interests so it feels less like work.

The above strategies may not all appeal to you and that's OK. Choose a couple to try for a little while. You can always make changes down the road if they don't fit your lifestyle. And don't forget to make regular contributions to your retirement account if you're able to do so.

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