Personal FinanceCanva | Brigitte Theriault from Getty Images Signature and canaran from Getty Images ProChristy Bieber
If you are behind on retirement investing, you should take advantage of catch-up contributions.
Cutting fixed expenses can free up more money for you to invest.
You may need to delay retirement if you need more time to catch up.
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For Americans ages 45 to 54, the median 401(k) balance is just $60,763 according to Vanguard’s How America Saves Report. This is far less than most people need to be ready to retire. Things don’t get much better for those ages 55 to 64, either, with the median balance going up to just $87,571. A nest egg of only $87,571 would produce only $3,240.13 at a safe 3.7% withdrawal rate. If you find yourself among the many people in their 50s who are falling short of where you need to be, there are techniques that can help you invest for your future. Here’s what you should do to get back on track.Take advantage of catch-up contributionsOne of the single best ways to get caught up is to take advantage of accounts that provide tax breaks for retirement. Accounts like a 401(k) and IRA allow you to reduce your taxable income based on the amount of contributions that you make during the year. For example, for each $1,000 you invest, you can save up to $220 on your taxes if you are in the 22% tax bracket (your savings will be more if you’re in a higher bracket or less if you’re in a lower one). These accounts have annual contribution limits, but you are allowed to invest more in them once you reach age 50. In 2025, the IRS reports that the maximum 401(k) contribution is $23,500 while the maximum contribution for IRA accounts is $7,000. However, once you are 50 or over, you become eligible for extra catch-up contributions.You can make an additional $7,500 catch-up contribution to your 401(k) after age 50 or if you are 60, 61, 62, or 63, you can make an extra contribution of $11,250 instead of an extra $7,500.
You can make an extra $1,000 catch-up contribution to your IRA after age 50
If you can max out these accounts, including catch-up contributions, you will get back on track very quickly to building a secure future. Investing $31,000 in a 401(k) from age 50 to age 67 would net you over $1.2 million — and since these contribution limits go up each year and you’d be eligible for the larger catch-up limits from ages 60 to 63, you’d end up even richer. Plus, if you are eligible for an employer match, this too would help your account grow.Cut fixed expensesNow, it may seem impossible to in