Is It Too Late To Start Saving for Retirement?

Pre-tax retirement saving options (pay tax when you withdraw) through employers include:

• 401(k) plans
• 403(b) tax-sheltered annuities
• Salary-reduction SEPs
• 457 governmental plans
• SIMPLE IRA plans

401(k) plans and their cousins — 403(b) tax-sheltered annuities, salary-reduction SEPs, 457 governmental plans and SIMPLEs — allow participating employees to defer a portion of their pay to their plan on a pre-tax basis. These contributions, along with the investment earnings they generate, aren’t taxed until you take distributions in retirement. Tax law limits this benefit by capping the annual amount of salary that can be deferred.

After-tax saving options (pay tax now and withdraw tax-free):

Most employer plans offer a Roth option as well, which lets you contribute after-tax dollars now so you can take qualified withdrawals tax-free later. For many people, diversifying their tax exposure or locking in tax-free income in retirement makes Roth contributions an attractive choice.

Roth catch-up contributions

If you’re getting a later start on your retirement saving, catch-up contributions can help you close the gap. Once you reach the age of 50, you can contribute an additional amount on top of the standard annual limit. Plus, under new IRS rules, higher earning employees (generally those making $145,000+ from the same employer in the prior year) must make their catch-up contributions as Roth contributions. While this rule changes how contributions are taxed, it can also increase future tax‑free income in retirement and expand overall saving capacity.

Individuals who don’t have access to an employer‑sponsored plan — or who want to save beyond workplace limits — have a similar opportunity to build retirement savings through individual retirement accounts (IRAs). Eligible individuals that are aged 50 or older may make additional ‘catch up’ contributions to IRAs. For individuals age 50 and older, the IRA contribution limit is higher than the standard annual limit due to permitted catch‑up contributions. These limits are adjusted periodically for inflation, so the maximum amount you can contribute may change over time. There is no rule against contributing to both an employer-sponsored plan and an IRA. However, depending on your income and whether you or your spouse (if applicable) participates in a workplace plan, the deductibility of traditional IRA contributions may be reduced or phased out.

Regardless of your age, maximizing your contributions to retirement savings plans and IRAs can be a tax-advantaged way to prepare for the future.

If you've been letting your retirement account idle, it's time to get going. Here are four simple strategies to ramp up your plan once again:

1. Set a contribution goal: Even if you can't do it all at once, aim to increase your contribution level gradually over time. For example, you might consider raising your contribution rate by a certain percentage each year until you hit your goal.
2. Capture the match: Check to see whether your plan offers employer matching contributions, as not all plans do. If it does, find out how much you need to contribute to take full advantage of the match. Matching contributions are like free money that can give your savings an extra boost.
3. Catch up: Many plans allow participants to make additional catch-up contributions to their plan accounts starting in the year they reach 50. If your plan includes this feature, it can be a good opportunity to put more money aside for your retirement.
4. Stay invested: Your plan may let you borrow from your account during your working years or withdraw money if you experience a financial hardship. While it’s nice to know the money is there if you need it, remember that you’re saving for your retirement. If possible, avoid taking money out of your account at all.

Planning for retirement can be very personal, and the right approach depends on your income, goals and overall financial situation. While IRS rules provide helpful opportunities, such as catch up contributions and tax advantaged accounts, navigating those standard options can feel complex. A financial professional can help you evaluate your choices, optimize your savings strategy and stay on track as limits and laws evolve over time.

If you’d like personalized guidance, consider connecting with one of our financial professionals. Visit our Wealth Management page to explore our tailored solutions that support your long-term planning.
Read More: Your Retirement Planning Journey - How to Retire