Behind on Retirement Saving? Here’s What to Do


Being behind on retirement savings is not uncommon. According to a Personal Capital study of users on their platform, people in their 50s had, on average, $461,779 saved for retirement. Depending on your needs, that may be enough to support the kind of spending you want in retirement.

But what do you do if you’re behind? Here are 4 steps to take if you’re behind on retirement savings heading into 2022.

1. Adjust Your Mindset

If you’re in your 40s or 50s and are behind on retirement savings, the most important thing you can do is change your mindset around money. The root of the word “decide” means “to cut away”. If you are going to decide to have a financially secure retirement, you’ll need to cut away the unnecessary things in your way.

After all, you can have anything, including a secure retirement, but you can’t have everything.

We’ve just started the new year, so maybe you’re still keeping your resolutions. It’s nice to have goals, but it’s more important to implement habits and routines that help you in your progress toward those goals. We’ll talk about some of those habits shortly.

However, the first step you can take is to make that commitment to your future self and cut away the obstacles keeping you from your goals.

2. Take Massive Action & Cut Expenses

The closer you are to retirement, the more changes you’ll need to implement. This may take form in several different ways. You may need to downsize your home. You may need to move to a less expensive part of the country. Lowering your living expenses will certainly be the biggest and fastest way to make progress if you’re behind on retirement savings.

It’s easy to fall into the trap of believing that we can’t dial back our lifestyles. If that’s you, I’d challenge you to reconsider your beliefs. I once talked with a gentleman who belonged to a ritzy country club, supported his two kids (even though they were taking a break from college), and didn’t have the courage to tell his wife how much they owed in back taxes.

While he had every opportunity to massively cut his expenses, he didn’t believe that these cuts were possible without alienating his family. Instead, he continued to enable them at their own peril. In the long run, showing a little tough love to his family (and himself) would have made all the difference in the world.

Taking massive action and cutting expenses can get even get more extreme. The number one cause of relationship stress is money. If you have a partner or spouse who refuses to be realistic about living within your means, now is the time to address it. If you’re committed to them, I would recommend counseling. You can find a financial therapist that will specifically help you through money issues on the Financial Therapy Association’s website.

If you’re not committed to your relationship with your partner, you may want to spend that therapy money on a divorce attorney instead. Why are divorces so expensive? Well, because they’re worth every penny. Just be sure to live within your means once things are wrapped up. Don’t go buy a new Corvette instead of investing money toward your retirement.

Moving. Saying “no” to your loved ones. Leaving an unreasonable partner. Hopefully, your actions don’t need to be this massive. But no matter what needs to be done, do it – and do it today.

3. Pay Yourself First

After you’ve gotten your mind right and made some big changes in your financial life, the time comes to start preparing for the future. The next step is to pay yourself first.

The idea of paying yourself first is not a new one. However, in my experience, nothing is more effective in getting you back on track if you’re behind on retirement savings. There are many ways to start tackling this. Personally, I would recommend tackling your finances in the following order:

  1. Pay off your debt, excluding your mortgage, starting with the highest interest rates first,
  2. Build your cash emergency fund with at least 3 months of your new living expenses,
  3. Max out your 401(k), including catch-up contributions,
  4. Max out your HSA (including catch-up), if one is available to you, and finally,
  5. Save anything extra into an after-tax investment account.

If you can’t max out your 401(k), then start with putting away 15% initially and adjust as you continue to make changes in your life.

The key is to continually adjust your living expenses to accommodate the amount you save – not the other way around.

4. Consider a Side-Gig

Even if you’ve already made big changes, there’s still more you can do. If you haven’t considered a side gig, now’s the time. While driving an Uber may not be the best fit for you, there are still plenty of other options that will bring in additional income.

The massive number of Americans exiting the workforce has brought about plenty of opportunities for anyone who wants to pick up extra money. You can find off-hour opportunities by working in the retail, restaurant, or hospitality space. You can also find extra income by opening an Etsy store, picking up contract work through Fiverr or Upwork, or you could even build a business around a YouTube channel!

Working online has become the norm since the pandemic, which means that the opportunities to pick up a side-gig that fits your lifestyle and talents have become much easier.

The fantastic upside of a side-gig is that you can continue to pursue it in retirement if it’s something you enjoy.

It’s All About Deciding

If you’re behind on your retirement savings, there’s still plenty that you can do to get back on track. However, the most important factor is to make those tough decisions and then quickly act toward them.

As someone who has struggled with “paralysis by analysis” in the past, I can tell you from experience that, because you’ve read this blog post to the end, you already know enough to get started. Action is the key. So, get started today! And good luck! I know you can do it.

If you need help catching up on saving for retirement, then click here to set up a quick, complimentary introduction call to see if Prana Wealth is a good fit. We do still have the capacity to take on new clients.

As a fee-only financial advisor in Atlanta, we can (and do) work virtually with clients across the U.S. and we’re here to help you when you’re ready.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but is intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax, or financial advice. Please consult a legal, tax, or financial professional for information specific to your individual situation. We often mention books and other products that we feel might find helpful. Wherever possible we use referral links; if you click one of the links in this video or description and make a purchase, we may receive a small commission or other compensation. We participate in the Amazon Services LLC Associates Program, an affiliate advertising program designed to allow us to earn fees by linking to and related sites.
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