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When you’re young, it’s easy to fall into the trap of thinking there’s no rush to save for retirement. But before you know it, you may find yourself in your 50s or 60s, and nowhere near your retirement savings goal.

If you’re in this situation, don't panic. It’s never too late to start saving for retirement. No matter your age or the state of your current savings, there’s always something you can do to improve your financial future.

And here’s the kicker — you’re not alone.

According to a NerdWallet survey, only 20% of people aged 45 to 54 feel confident about their retirement savings. That means the majority of us are feeling behind, but it’s time to change that.

Today, I’ll show you how a 45-year-old can go from no savings to $1.6 million before age 65… and how even just putting away enough money every year for 10 years can help a 55-year-old build an income-generating portfolio by the time they’re 65.

So, let’s get to work. Because the truth is, it’s never too late to change your future. This is your chance to take control, make smart decisions, and secure a comfortable retirement. Ready? Let’s get started.

1) Assess Your Current Situation

The first step is to figure out where you are now and where you need to be when you retire. Do you have any money saved for retirement? Some, but you’re not sure it will be enough? Maybe a little bit split across old employee 401(k) accounts? Nothing at all? Are you 15 years away from retirement… or is it closer to five?

The steps you take next all depend on where you stand now.

You’ll want to pull the most recent statements for any retirement or savings accounts you may already have. This may be the part you’re dreading most, but you just have to hold your nose and do it. Either print out these statements or take notes about each account (what type of account it is, how much money is in it, how much you’re currently contributing to it, and how much it’s growing). If you don’t have any retirement or savings accounts, just write down $0 as your starting point.

Now that the hard part is over — and that really is the hardest part — you can move on to determining how much you’ll ultimately need in retirement. This number will be completely unique to you and your wishes for retirement. Someone who dreams of spending their golden years tending to their home garden and reading every book in their local library is going to have a very different number than a couple who want to spend their days golfing and traveling the country to visit family and friends. The number of years you are away from retirement will also have an impact on what you do next.

You can find many excellent retirement calculators on the internet with a quick Google search for “best retirement calculator.” They each provide space for you to enter details about your age, your current savings situation, the age you plan to retire, how long you expect to live, how much money you’ll need each year in retirement (experts suggest 60% to 80% of your pre-retirement annual salary, although this is more of a rule of thumb), etc. It then uses this information to calculate how much you need to save each month or year to meet this goal.

The best part about these calculators is that you can tweak your answers to see how they affect the outcome. Maybe you expected to retire at 60, but you can’t meet the monthly savings goal suggested by the calculator. What happens if you push your retirement date back to 65 or 67? Or perhaps you have your heart set on retiring at 62, could you adjust your lifestyle enough to live within the recommended amount?

Now that you have a realistic picture of your situation and have set achievable goals, it’s time to get started on hitting those targets!

2) Max Out Your Retirement Accounts

One of the most effective ways to boost your retirement savings is by maximizing contributions to your tax-advantaged accounts. The IRS also makes special allowances for those aged 50 and older — "catch-up" contributions that let you save more than the standard limits.

For 2024, you can contribute up to $23,000 to a 401(k) and an additional $7,500 if you're over 50. Similarly, the IRA contribution limit is $7,000, with a $1,000 catch-up contribution. These higher limits provide a powerful way to rapidly increase your savings.

Wondering if that’s actually enough to make a difference? Dave Ramsey has a great example on the power of maxing out these accounts even later in your career:

“Let’s say you woke up at 45 years old with nothing saved for retirement before deciding to max out your 401(k). What would happen? Well, if you invest $22,500 every year for 20 years in good growth stock mutual funds, you could retire at age 65 with about $1.6 million in your nest egg. And that’s without factoring in a company match on your contributions!”

Even with absolutely no growth, socking away $25,000 a year for 10 years — let’s say from age 55 to 65 — would give you an extra $250,000 for your retirement. That’s not necessarily enough all on its own, but financial experts agree that it’s enough to build an income-producing portfolio that can last through your retirement.

In addition to fully funding a traditional 401(k), you could look into opening a Roth IRA, which offers tax-free growth and tax-free withdrawals in retirement. That makes them an excellent addition to your savings strategy.

By taking full advantage of these accounts, you can make significant strides in catching up on your retirement savings. Wondering where you’re going to get the money to fund these accounts? Keep reading...

3) Spend Less So You Can Save More

If you want to put more money toward retirement, you probably don’t have to look very far. It starts with taking a hard look at your current budget and identifying areas where you can cut back.

The goal here is to reduce unnecessary expenses and reallocate those savings to your retirement accounts. It might sound simple, but it requires discipline and a bit of sacrifice.

Start by analyzing your monthly expenses. Look at recurring costs such as subscriptions and memberships. Do you really need multiple streaming services and cable? Cancel the ones you can live without. After years of complaining about cable prices, my parents (both in their 60s) finally made the decision to cut the cord when Google Fiber rolled out in their neighborhood, a change that’s saving them more than $100 each month. (Sometimes I wondered if they’d be the last couple on earth with a personal landline.)

Other places people find easy budget cuts? Eating out (surveys show Americans average around $3,000 a year on this expense) and insurance payments (most people who shop around or switch providers say they’ve saved hundreds of dollars on their annual payments). You can use the savings calculator tools offered by insurance companies or work with an independent agent to find the best rates.

It's important to remember that these cuts are not about deprivation but about prioritizing your future financial security. By reallocating the money saved from these expenses into your retirement accounts, you can significantly boost your savings.

Yes, it might be tough to give up some luxuries now, but the long-term benefits are worth it. As you trim your expenses and funnel those savings into your retirement, you'll be taking significant steps toward a more secure and comfortable retirement.

4) Take Advantage of Your Greatest Asset — Your Home

A good portion of the population has most of their money tied up in a very important asset, their home. And while it currently serves as a roof over your head, it can become a valuable asset when it comes to funding your retirement.

There are several ways to tap into your home equity to support your retirement goals, especially if you don’t currently have any money saved.

First of all, not having to worry about paying off a mortgage during retirement can be a massive benefit. For most retirees, housing is their largest expense. If you’re close to paying off your mortgage and wondering where you’ll find the cash to contribute to a retirement account, look no further. Once you’ve made your final mortgage payment, just shift that allocation into a 401(k) or IRA. Since you’re already used to that money being spoken for, you won’t “feel the pinch” quite as badly as if you were cutting down your budget.

Another option is downsizing. Selling your current home and moving to a smaller, more affordable one can free up money that can be invested in your retirement accounts. This not only reduces your housing costs but also provides a significant sum that can be added to your savings.

Another option is a Home Equity Line of Credit (HELOC), which allows you to borrow against the equity in your home. This can be a useful tool for managing large expenses or providing a source of funds in an emergency.

Finally, for those 62 and older, a reverse mortgage is another possibility. This financial product allows you to convert part of your home equity into cash without having to sell your home. However, it’s crucial to understand the terms and conditions, as well as the potential impact on your estate.

Remember, before making any decisions regarding your home, consider current market conditions, your personal financial situation, and potential tax implications. Consulting with a financial advisor can help you determine the best strategy for leveraging your home equity.

5) Keep Your Day Job

I know, I know. No one wants to be told they have to keep working. But if you’re way behind on saving for retirement and you enjoy your job, working a few years longer can provide significant benefits for your retirement savings.

By extending your career, you give yourself more time to save and invest — and an income to put toward those important contributions.

Additionally, delaying Social Security benefits can result in higher monthly payments once you do retire. For each year you delay receiving Social Security benefits past your full retirement age up to age 70, your benefit increases by approximately 8%. This can make a substantial difference in your retirement income.

If the thought of staying in your current job isn’t so appealing, consider alternative work options. The gig economy offers various opportunities, such as driving for rideshare companies, freelancing, or consulting. These jobs can provide additional income while allowing you to phase into retirement gradually.

There are also psychological and social benefits to staying in the workforce longer. Many retirees find that working part-time helps them stay engaged and connected, which can contribute to overall well-being.

Remember, every extra year you work is an additional year to save, invest, and grow your retirement funds, which can significantly improve your financial outlook in retirement.

6) Get Professional Help

Planning for retirement can feel overwhelming for anyone, especially if you’re starting late. Working with a professional can make a significant difference.

A financial advisor can help you evaluate your current financial situation, set realistic goals, and develop a strategy to achieve them. They can also assist in optimizing your investment portfolio, ensuring you’re not overpaying in fees, and taking full advantage of tax-advantaged accounts.

When selecting a financial advisor, look for someone with experience in retirement planning and a “fiduciary responsibility” to act in your best interest (those are crucial words to look for). This ensures that the advice you receive is tailored to your needs and goals.

Working with a professional can provide peace of mind and help you stay on track as you work towards a secure and comfortable retirement.

Catching up on retirement savings may seem challenging, but it's far from impossible.

With 20 years left before retirement, you can grow your retirement contributions into $1.6 million and call it a day.

With only 10 years left, you can save $250,000 just by making your 401(k) contributions, creating an income-generating portfolio to sustain you through your golden years.

Even if you’re a few years away from retirement, you can take advantage of your home (your greatest asset) by downsizing and using the difference to fund your retirement portfolio.

By taking strategic steps like these, you can significantly improve your retirement outlook. Remember, it's never too late to start saving, and every little bit helps. Start implementing these strategies today to build a brighter financial future for tomorrow.