10 Tips for Catching Up on Retirement Savings

Need to get your retirement savings back on track? Start with these 10 tips.

In a perfect world, you’ve been saving a large portion of your salary every year in a retirement account. That money has been earning interest and you’ll be able to retire comfortably, maybe even early. The reality of retirement, however, is sobering. 68% of individuals aged 55 to 64 have retirement savings far below what they’ll need for their expected years in retirement, according to the National Institute on Retirement Security.

No matter how close you are to retirement or how little you have saved up, it’s never too late to take immediate action. Social Security and Medicare will most likely not be enough to cover your retirement expenses, so start saving and budgeting your money. Consider these tips when planning your retirement.

Couple nearing retirement speaks with an advisor about their retirement savings

Savings Strategies

1. Pay off any high-interest debt as quickly as you can to clear the way for savings.

2. Find ways to shave dollars from your daily expenses so you have more money to contribute to savings. This involves reducing discretionary expenses and making lifestyle changes to free up cash.

3. Put extra money you receive toward savings, such as: tax refunds, salary increases and bonuses.

4. Increase your earnings before you take full retirement. Take a second job, for a few additional years or prepare for a part-time job during your early retirement.

5. Target a savings rate outside of your comfort zone. Recognize that this will require exceptional discipline, especially if you have been saving little to nothing so far.

68% of individuals aged 55 to 64 have retirement savings far below what they’ll need for their expected years in retirement.

National Institute on Retirement Security

Financial Tactics

6. Contribute the maximum amount allowed for you to your IRA (Individual Retirement Account) and/or 401(k) every year. You may want to contact a financial advisor or tax professional for further information on your specific situation. If you have matching contributions from your employer, be sure you take advantage of this benefit. These investment plans may also give you tax savings now or when you start withdrawals, depending on your choice of plan type.

7. You may be able to contribute up to $1,000 more to your IRA for yourself and your spouse if you are age 50 or older. You can make catch-up contributions to your Traditional or Roth IRA in accordance with the IRS’ income rules. Catch-up contributions (as well as regular contributions) to an IRA are due by the due date of your tax return (not including extensions).

8. Check with the Social Security Administration PDF opens in new window. to understand how your retirement start date impacts benefits. The later you start drawing benefits prior to age 70, the larger your monthly benefit will be. No matter when you retire, be sure to sign up for Medicare three months before you reach age 65.

Retired friends gather for coffee

9. Explore Traditional and Roth IRAs to get the best tax treatment based on your expected income levels over time.

10. Investigate your eligibility for the Saver’s Credit, available to some low-to-moderate income families to match a portion of your IRA or 401(k) savings.

While retirement is a lifetime goal for many people, some arrive unprepared. Once you begin to make changes and start saving, you may be surprised by how quickly your retirement funds add up. Don’t delay the process.

Banking 101

How to Use Your Debit Card Cash Back to the Fullest

Ever wish you had money to play with? More cash to save? Here's how to make the most out of those extra dollars you earn.

Read Article
How Does Savings Account Interest Work? Here's Your Guide
Get 1% cashback on Debit from Discover. 1% cashback on up to $3000 in debit card purchases every month. Limitations apply. Excludes Money market accounts.Discover Bank,Member FDIC.Learn More

Saving

4 Places to Keep Your Emergency Fund

You know you need an emergency fund for life’s little surprises, but where should you keep it?

Read Article

A simple way to reach your goals.

Watch your savings grow with a CD.

Lock in Your Rate
Certificate
of Deposit

Discover Bank, Member FDIC

How Should I Save If the Fed Cuts Rates?

Career & Education

4 Side Hustles You Can Do While Working Full Time

From selling unwanted items online to launching a blog, there are side hustles you can start today.

Read Article

Lifestyle

10 Affordable Ways to Spread Generosity This Holiday Season

You earned it.
Now earn more with it.

Online savings with no minimum balance.

Start Saving
Online
Savings

Discover Bank, Member FDIC