Strategies to Catch Up on Retirement Savings

November 16, 2015 — 4:57 PM EST

Blame it on the Great Recession or a lack of planning but either way countless people don’t have enough for retirement. According to a recent report from the U.S. Government Accountability Office, 52% of households with people 55 and older haven’t saved one penny for retirement. The median amount that households 55 and older have saved is $104,000, which isn’t even enough to cover health care costs in retirement let alone housing, food, and other expenses. However, there is good news amid the dismal outlook. It’s never too late to start saving. Whether retirement is a few years out or is just around the corner, there are lots of ways to catch up on retirement savings. (Read more, here: Retirement Savings: How Much Is Enough?)

Work Longer

Most people dream about an early retirement but for a slew of different reasons end up working much longer than they anticipated. On the surface, it may not seem like the ideal situation, but working longer does have its benefits. For example, the longer you work and delay collecting Social Security, the more you receive. In fact, if you delay collecting Social Security after you reach full retirement age, you’ll get an additional up to 8% each year until you hit 70. (Read more in Tips On Delaying Social Security Benefits.) Also, the more years you put in at your job, the more money you can sock away for your eventual retirement. Not to mention you’ll have time for your current investments to work and grow. The longer you bring home a paycheck, the less time you will spend money in retirement.  

Curb Expenses To Save More

Tons of people would rather throw their money away on frivolous things, pushing the thought of retirement to the side. But an easy way to save more is by curbing one's spending. Saving shouldn't stop with forgoing buying dinner or a pricey cup of coffee. Bonuses, cash awards or any other monetary gifts should go directly into the retirement savings account to increase the amount going to the golden years. (Read more in 4 Ways To Cut Your Living Expenses.)

Max Out The Company Sponsored Retirement Plan

Companies want their employees to take advantage of their retirement savings benefits and will incentivize workers by offering to match a portion of their savings in a company sponsored 401 (K) plan. For instance, some companies will match up to 6% of the amount an employee puts away in their 401(k) each year. It's free money, and if you are trying to catch up on retirement savings, you are going to want to make sure you save enough to at least get the maximum match rate. Even better, contribute the maximum amount allowed, which for 2015 is $18,000. If you are over the age of 50 many companies offer a catch-up provision to their 401 (K) plans which lets you contribute an additional $6,500. Some businesses will even match a portion of the catch-up contributions.

Plan On Using Home Equity In Retirement

In a perfect world, your home will be paid off by retirement, and you will be settling down into an easy life. However, in the real world, the equity built up in your home is going to be needed for retirement. While it is not an ideal situation for some people, downsizing your home in retirement can go a long way in increasing the amount you can save. After all, by trading a four-bedroom home for a two-bedroom condo and you can save thousands of dollars not only in the price of the home but the costs to maintain it.

Get a Part-time Job

If you have a huge shortfall of retirement savings, one way to save is to get a part-time job and allocate all of that income to saving for retirement. A part-time job can be something traditional like working at a retailer or something non-traditional like providing consulting services, but by getting a part-time job you can boost your income will improve your savings rate. Thanks to the Internet there are also a lot of opportunities to work from home at all sorts of hours, making a part-time job easier to manage. (Read more in The Best Jobs For Retirees.)

The Bottom Line

Saving for retirement should be a priority for millions of Americans, but far too many have little if anything saved for their golden years. From living expenses to healthcare costs, people are going to need a lot of money in retirement. Thankfully there is still time to save more regardless of your age. From working longer to maxing out a company sponsored retirement plans, there are numerous ways to catch up on retirement savings.