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How to save more for retirementAllocating a higher percentage of your salary toward retirement is an effective pathway to grow your savings – and improve your shot at financing your post-work life.

But is that true for investors in their 50s? Can folks in middle age significantly impact their retirement outlook at the eleventh hour of their careers?

To answer those questions, SmartAsset crunched the numbers.

We looked at three sample savers. They all have the same amount saved at age 50, but each makes a different decision about whether to increase savings at that point.

What we found: It’s never too late to ramp up your retirement savings. (And if you’re looking for help planning for retirement, consider working with a financial advisor.)

For a look at the data, read on.

Our Analysis

SmartAsset analyzed three sample retirement portfolios.

In each example, a 50-year-old retiree starts with $61,530, which is the median retirement account balance for folks between the ages of 45 and 54, according to Vanguard’s “How America Saves 2022” report.

All retirees invest pretax money in a diversified fund returning 5% and earn $83,812 pre-tax, which is the median household income for folks between the ages of 45 and 64, according to the Census Bureau’s 2021 1-year American Community Survey. For the sake of simplicity, their household income doesn’t change during the final 15 years of their working lives.

When it comes to saving habits, their behaviors diverge.

Saver A is the least enthusiastic saver. He squirrels away 3% of his $83,812 household income and earns a 3% employer match. That equates to a $419 monthly contribution (including both employee and employer contributions). He doesn’t change his percentage savings rate during the final 15 years of his working life.

Saver B decides to ramp up savings slowly. He starts with a 3% contribution, plus a 3% employer match, then increases his savings by a percentage point each year until retirement. By the time he reaches 65, he is funneling 17% of his income toward retirement. His contributions start at $419 per month and end at $1,397 at 65.

Saver C is a super-saver. He directs 20% of his household income to a retirement account starting at age 50 and earns a 3% employer match. That is a $1,606 monthly contribution for 15 years.

Running the Numbers

Saver A, the 3 percenter, is the least aggressive saver. His $419 monthly contribution swells his retirement account to $239,346 by age 65. That’s still more than a quarter million dollars, but his peers saved more.

Saver B, the slow-but-steady saver, sees his retirement account grow to $352,583 by age 65. That’s $113,237 more than Saver A saves, or about 30% more. That difference can help fund a more robust, longer retirement for Saver B.

Saver C, our super-saver, makes up for the lost time. His account reaches $555,063. That’s $200,000 more than Saver B socks away and more than double Saver A’s nest egg. With more savings, Saver C is less likely to outlive his retirement savings. A larger account can also improve his lifestyle in retirement and even augment the odds that he’ll be able to leave a legacy to his heirs.

5 Ways to Save More for Retirement

The numbers show that it’s possible to make a significant difference in your retirement account, even if you don’t start seriously saving until your 50s.

But, of course, it’s easier to talk about saving more than it is to actually do it. Some strategies to get started include these:

1. Think small. If raising your retirement savings from 3% to 20% in a single year is intimidating, start small like Saver B did. Even an increase of a percentage point in your salary per year can have a significant impact on your total savings over time.

2. Bank your tax refund. Small windfalls such as tax refunds can pad out a retirement account and increase your savings percentage for the year.

3. Allocate a percentage of your raise. The savers in this example never got a raise, but imagine the difference if they had one each year. Consider redirecting a percentage of any annual raise or bonus to your retirement savings accounts.

4. Secure your match. Each of these retirees took advantage of their employer’s 401(k) match. Not doing so is like leaving free money on the table. Make sure you’re funneling enough into your account to claim any workplace match.

5. Focus on your strategy. When times get tough, it’s helpful to remind yourself of your strategy and not make gut decisions. A financial advisor may be able to help you identify an investing and saving strategy that produces retirement income.

Bottom Line

The earlier you can start saving for retirement, the better. But if you’re starting late, take note that you can make a difference in your savings by increasing the amount you invest and staying consistent.

Retirement Planning Tips

  • Planning for retirement can feel like solving a complicated puzzle, but you don't have to go at it alone. A financial advisor can help you put the right pieces together by assessing your needs and connecting you with the services that are right for you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Social Security plays a critical role in the retirement plans of many. By delaying Social Security beyond your full retirement age, you can increase your benefit up to 8% per year until age 70. SmartAsset's Social Security calculator can help you determine the best time to claim your benefits.

Questions about our study? Contact press@smartasset.com.

Photo credit: ©iStock.com/Yaroslav Astakhov

Susannah Snider, CFP® Susannah Snider is the ​​Managing Editor of Financial Education at SmartAsset where she oversees the strategy and production of all expert-driven personal finance content, including commentary and columns from CFPs and other financial professionals. In addition, Susannah writes articles, newsletters, columns and commentary found on SmartAsset.com and syndication partner sites. She also serves as a spokesperson and quoted expert on a wide range of personal finance and financial planning topics, including retirement, investing, estate planning, mortgages, and more. Susannah earned her CFP designation in 2019 and leverages her expertise to easily explain complicated financial topics with an approachable tone. Prior to SmartAsset, Susannah was the Senior Editor for Financial Advisors at U.S. News & World Report. She also previously covered personal finance, careers, and college financing for U.S. News and worked as a staff writer for Kiplinger’s Personal Finance magazine. She is the recipient of the McGraw Fellowship for Business Journalism program and won the 2018 RTDNA/NEFE Excellence in Personal Finance Reporting award in the digital category. Susannah holds an undergraduate degree from the University of Rochester and a master's degree in journalism from the University of Southern California. Susannah has appeared as a personal finance expert on Cheddar, Fox & Friends, The Tavis Smiley Show, Your Money on Wharton Business Radio, Fox Business News and more.
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