How to Catch Up on Retirement Savings: Strategies for 30s and Beyond

This post was originally published on February 24, 2022, and extensively updated on May 20, 2024.

Saving for retirement is essential, but many Americans don’t have enough money to retire comfortably. Waiting too long to begin saving may mean that you’ll struggle to catch up and can’t afford to maintain your lifestyle after you retire.

At CMP, we work with our clients every day to help them prepare for retirement, including providing tips about budgeting and investments. If you don’t have as much savings as you’d like, whether you’re close to retirement age or you still have to work for the next few decades, you’ll need retirement strategies for late starters to help you. We’ve created this guide on the options available to catch up on retirement savings.

How Much Should You Be Saving for Retirement?

Before we reveal the best ways to fast-track your retirement savings, let’s discuss how much you should save. The average American has $333,940 saved for retirement, but that number is skewed by the highest earners. The median retirement savings for Americans is just $87,000. These numbers tell a sobering story about retirement in the United States.

To put these numbers in perspective, here are some guidelines for how much you’ll need to save for a comfortable retirement. Two basic methods can be used.

1. The multiple method. This method uses your income at retirement and multiplies it by 80% to determine how much annual income you’ll need after retirement. Multiply that number by how many years you expect to live beyond retirement to determine how much your total savings should be. If you were earning $100,000 at retirement and expected to live 20 more years, you would need $80,000 X 20, or $1.6 million, to retire comfortably.

2. The 4% rule. This method works by estimating the income needed in retirement and dividing it by a 4% return on your investments. If you required $70,000 in annual income for retirement, you would divide that number by .04 to arrive at $1,750,000 in savings. You’ll need to adjust for inflation, but theoretically, you could live for 30 years on your earnings.

Your retirement savings goal should allow you to live comfortably throughout your retirement. Some people plan to downsize and live quietly in retirement, while others may want to travel the world. Your plans should factor into your calculations so you can save accordingly.

Retirement Contribution Limits for Business Owners (2025 and 2026)

For business owners, retirement plans are not just savings vehicles. They are tax planning tools. Used correctly, they can reduce current taxable income while building long-term wealth.

Business owners with their own 401(k) plans may also be eligible for employer contributions, which can significantly increase total annual retirement contributions beyond the employee limits listed above.

SIMPLE IRA and SIMPLE 401(k) Plans

Standard Contribution Limits

• 2025: $16,500
• 2026: $17,000

Catch-Up Contributions (Age 50+)

• 2025: $3,500
• 2026: $4,000

Special Catch-Up (Ages 60–63, if allowed by plan)

• 2025: $5,250
• 2026: $5,250

Traditional and Roth IRAs

Standard Contribution Limits

• 2025: $7,000
• 2026: $7,500

Catch-Up Contributions (Age 50+)

• 2025: $1,000
• 2026: $1,100

IRA limits apply across all traditional and Roth IRAs combined.

Business owners with their own 401(k) plans may also be eligible for employer contributions, which can significantly increase total annual retirement contributions beyond the employee limits listed above.

SIMPLE IRA and SIMPLE 401(k) Plans

Standard Contribution Limits
2025: $16,500
2026: $17,000

Catch-Up Contributions (Age 50+)
2025: $3,500
2026: $4,000

Special Catch-Up (Ages 60–63, if allowed by plan)
2025: $5,250
2026: $5,250

Traditional and Roth IRAs

Standard Contribution Limits
2025: $7,000
2026: $7,500

Catch-Up Contributions (Age 50+)
2025: $1,000
2026: $1,100

IRA limits apply across all traditional and Roth IRAs combined.

Important Planning Note for 2026

Beginning in 2026, individuals earning more than $150,000 in prior-year wages must make employer plan catch-up contributions on a Roth basis. This does not reduce the amount you can contribute, but it does affect the tax treatment of those catch-up dollars.

10 Best Ways to Catch Up on Retirement Savings

If you’re getting a late start on retirement savings, there’s a lot you can do to catch up and get on track. Here are the ten strategies we suggest.

1. Take Advantage of Catch-Up Contributions

If you’re over 50, it’s time to make the most of contributions to your employer-based retirement plan or individual plan. In many cases, you can make additional contributions to boost your retirement savings.

People over 50 can make annual catch-up contributions of $7,500 to 401k, 403b, and 457b plans; $3,500 to SIMPLE 401k and IRA plans; and $1,000 to traditional and Roth IRAs. To make catch-up contributions to retirement accounts, you must max out your allowable contributions first.

2. Delay Collecting Social Security

Social Security distributions are adjusted for inflation and guaranteed by the federal government. You may begin collecting Social Security early, but if you delay past full retirement age, your monthly benefit increases. Delayed retirement credits stop accruing at age 70.  This option may not work for everyone, but it's worth considering.

Here’s an example. The full retirement age is 66 for people born between 1943 and 1954. Mary was born in 1954 and reached full retirement age in 2020. For each additional year she waits to collect Social Security, her benefit increases by 8%. If she waits four years until she turns 70, her benefit will go from 100% to 132%, giving her a significantly higher income than she would have had if she retired in 2020. Increases vary depending on when you were born.

3. Start Making Smart Investments

If you’re planning to make investments as a retirement strategy and you’re over 50, make sure to strike a balance between being aggressive where it makes sense and being conservative enough to preserve the savings you’ve accrued.

Limiting your stock investments to 100 minus your age is a good rule of thumb. A 50-year-old would want no more than 50% of their investments in stocks. Working with a professional financial advisor can help you manage your asset allocation and avoid unnecessary risks.

4. Scale into Retirement

If you’re just getting started with retirement savings, you might consider working a few years longer than you originally intended. This strategy dovetails with what we mentioned above about delaying the collection of Social Security benefits.

You might ask your employer to reduce your hours so you can spend more years earning income. Or you can retire from your full-time job and find a part-time job for a few years. With the growth of on-demand services and the gig economy, there are many ways to earn extra cash throughout retirement.

5. Enable Automated Transfers to a Savings Account

Having several savings mechanisms in place can help you accumulate money for retirement. In other words, don’t put all your eggs in one basket.

In addition to your 401k, consider opening a high-yield savings account and setting up automated transfers to meet your savings goal. You can coordinate your transfers with your pay schedule to ensure that money is transferred as soon as it becomes available.

6. Utilize Health Savings Accounts (HSAs) for Retirement

Health Savings Accounts (HSAs) funds must be used for qualified medical expenses for people under 65. There are penalties if you withdraw funds for other reasons. If you don’t use the money in your HSA, it rolls over to the next year.

Maxing out your HSA contributions each year can help you accumulate savings for retirement. The 2025 contribution limit is $4,300 for self-only coverage and $8,550 for family coverage. The 2026 contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. There is also a $1,000 catch-up contribution for individuals age 55 or older. After age 65, withdrawals for non-medical expenses are no longer subject to the HSA penalty, but those non-medical withdrawals are generally taxable as income.

7. Set Goals and Expectations

What is your vision of retirement? Do you want to travel the world? Do you want your mortgage to be paid off? Asking questions like these can help you set financial goals and expectations.

Whatever your financial situation, clear expectations can help you create a plan for retirement savings and increase the likelihood that you’ll meet your goals.

8. Create a Practical Budget

We strongly recommend creating a budget that aligns with your savings goals. With a budget, you may avoid falling into the practice of spending more than you can afford or accumulating credit card debt, which can interfere with meeting your goals.

Review your monthly living expenses and look for opportunities to save. For example, you could refinance your car loan or mortgage at a lower interest rate, eliminate unwanted subscriptions, and find ways to carve money out of your budget to add to your savings. If you have credit card debt, paying it down can also help you save money in the long run.

9. Start a Side Hustle

A good side hustle can add thousands of dollars to your annual income and help you ramp up your retirement savings without negatively impacting your lifestyle. Side hustles can take a wide array of forms.

Some people create a side hustle from a hobby or a skill. You might do woodworking in your spare time, drive an Uber, or start a handyman business to help people with repairs.

If you decide to start a side hustle, report your extra income to the IRS and use the income to invest for your retirement. You may be able to make pre-tax contributions in some cases, which is ideal if you don’t want to move into a higher tax bracket.

10. Seek Professional Advice

Partnering with a financial advisor or a CPA can help if you’re unsure how to catch up on retirement savings. A financial advisor can help you evaluate investments and decide on a strategy that accommodates your goals.

Your advisor can help you create a budget and decide on the right savings and investment strategies to maximize your earnings. They can help you diversify your portfolio to match your risk tolerance and save the money you need for a comfortable retirement.

FAQ About How to Catch Up on Retirement Savings

Here are some of our most frequently asked questions about catch-up retirement savings.

When Should I Start Saving for Retirement?

The simple answer to when to start saving for retirement is “as early as possible.” The earlier you begin saving, the more you can benefit from compound interest. We recommend that everyone take advantage of employer-sponsored retirement plans, such as 401(k)s or IRAs, as soon as they become eligible and max out their annual contributions. If your company offers an employer match to your contributions, take advantage. You can potentially double your savings by participating.

If your employer doesn’t offer a retirement savings plan, you should open a personal account, such as a traditional or Roth IRA, and contribute as much as possible.

Is Social Security Based on the Last 5 Years of Work?

No, your Social Security retirement benefits are based on your lifetime earnings. The SSA indexes your actual earnings to account for increases in average wages. Then, they calculate your average indexed monthly earnings using your highest 35 years of earnings and apply a formula to determine your benefit amount.

If you don’t have 35 years of earnings, your benefit will be lower than if you worked longer. Any additional work you do can increase your future benefits by replacing a year of zero earnings. You can view your benefit estimate and earnings record at any time by creating an online account to access your Social Security information.

Is It Too Late to Start Saving For Retirement?

No, it’s never too late to start saving for retirement. You’ll save more if you start early than if you wait, but that doesn’t mean you can’t accumulate enough savings to supplement your Social Security benefit and have a comfortable retirement. 

If you’re getting a late start, take advantage of catch-up contributions. You may want to work with a professional to minimize your taxable income and maximize your savings and retirement earnings.

Are There Any Withdrawal Restrictions When Catching Up on Retirement Savings?

There are no special withdrawal restrictions when catching up on retirement savings. You may begin to withdraw money at age 59 ½ without penalties.

Recent legislative changes increased the required minimum distribution starting age to 73 for many taxpayers and reduced the penalty for missed required minimum distributions. The new law also allows exceptions for withdrawals made to pay expenses related to an emergency or natural disaster. You can read the full details here.

Let CMP Help Create a Plan to Increase Your Retirement Savings

Reaching your retirement goals doesn’t need to be complicated or stressful. Taking advantage of the catch-up retirement strategies we’ve listed here can ensure that you know how to catch up on retirement savings as of today.

Do you need professional guidance to catch up on retirement savings? CMP can help in all 50 states!