6 Ways to Recover When You Got a Late Start to Retirement Planning

Time flies, and retirement has a funny way of sneaking up on us. As financial advisors in Atlanta, we see this a lot: One minute, you’re in your early-20s, just starting out in your newfound career with retirement just a far-off dream. Then, in what seems like the blink of an eye, you’re staring down the home stretch to what should be your retirement date. Except now, instead of having decades to plan, you maybe have a decade.

If you find yourself in this situation, you’re hardly alone. Thankfully, there are steps you can take that can help you make up for lost time. The team at Linscomb & Williams put together the following 6 concrete steps that can help you catch-up, but the key is starting now!

1. Contribute More and Take Advantage of Catch-Up Contributions

Are you contributing the maximum amount to your retirement accounts every year? Are you taking full advantage of your employer match? If you’re further behind on your retirement planning than you had hoped, you should be doing both!

For 401(k), 457 and 403(b) accounts, your maximum regular contribution limit in 2021 is $19,500. However, once you reach age 50, the IRS allows you to make an additional catch-up contribution of $6,500, for a total of $26,000.

The most you can contribute to an IRA in 2021 if you’re under the age of 50 is $6,000, but once you turn age 50, you can contribute an extra $1,000 in catch-up contributions, bringing the total to $7,000. This might not sound like much, but any extra money put away now can help you in the future.

For more about how catch-up contributions work, read our recent blog post: Need a Second Chance on Your Retirement Planning? All You Need to Know about Catch-Up Contributions.


Ready to have a serious conversation about your retirement? Contact the team at Linscomb & Williams to see how we can help.


2. Look to Your Assets

You can increase the amount of cash you have for retirement by using your assets, principally your home. A home equity loan lets you cash out some, or all, of the equity you’ve built up in your home. Equity is the excess of your home’s current value above the balance remaining on your mortgage, if any. You can use the proceeds from a home equity loan any way you wish, and you may have five, 10 or 15 years to repay the loan, depending on the loan’s terms.

You might wonder, “How can borrowing money enhance my retirement planning?” That’s a good question because the notion is a bit counter-intuitive. It relates to the fact that we find ourselves today in a place of historically low fixed mortgage rates. The math can be complicated (so get help from a qualified financial advisor), but if you have a time horizon of a decade or more before you will retire, it can be attractive to refinance and/or cash-out available home equity to reinvest the cash freed up in higher earning assets. This is what financial advisors call positive leverage. All of this depends on careful evaluation of your ability to handle required payments and relies on the financial discipline to keep the cash freed up fully invested for the long-term.

Again: Before taking out any type of loan on your home, discuss your situation with a financial advisor. There are pros and cons to these strategies that you should be aware of before deciding.

Another strategy to increase your retirement cash is to downsize or relocate to an area with lower housing costs. If you can move to a less expensive home, you may be able to pocket the proceeds from the sale of your old house and enjoy lower monthly payments – or pay for a new home straight-out if the proceeds from the sale will cover it. In addition, you can liquidate other assets you no longer use, such as a vacation home or a boat.

3. Revisit Your Investment Strategy

Your investment approach might not be yielding the returns you require. Frequently, investors who are too risk-averse are shortchanging their retirement plans by maintaining an overly conservative portfolio. It’s important that your investments can keep up with or beat inflation, because $100 today doesn’t equal $100, 20 years from now.

The interest rates currently available from most fixed income securities and money market accounts might leave you with negative inflation-adjusted returns. Talk to a financial advisor about taking a more aggressive stance by increasing the percentage of your assets allocated to higher-risk, higher-return investments while maintaining a highly diversified portfolio. Your financial advisor can give you specific recommendations on how to proceed.

4. Plan to Work Longer

More and more seniors are deciding to work longer, either because they have to, or because they find comfort in continuing to earn income. In this situation, not only do regular paychecks help, but you may be able to contribute to your retirement accounts for longer periods of time, instead of withdrawing from them. This allows these accounts to continue growing and reduces the number of years you’ll be relying on them for income.

Other benefits of working longer include: 

  • More time to pay off your debt before retirement, including your mortgage
  • Company-sponsored health insurance
  • Employer matches to your retirement plans
  • Bonuses
  • Other employee perks

If you got a late start to your retirement planning, working later may be a necessity. Talk to a financial advisor.

5. Delay Social Security

Even though you can claim your Social Security benefits as early as age 62, it might make more sense to postpone your claim. The more years you wait (up to a maximum of age 70), the more you’ll receive each month. Furthermore, by waiting until your full retirement age (which can be 66 or 67, depending on the year you were born), you can avoid having the government discount the amount of your monthly payments.

Waiting to claim Social Security can make a big difference in your post-retirement lifestyle. Yet not all individuals will be best served by waiting until age 70. A financial advisor can walk you through the trade-offs and help you determine the optimal age at which to claim your benefits.

6. Talk to a Financial Advisor

If you got a late start to your retirement planning, you know how difficult it can be to stay on track, be motivated and make saving for retirement a priority. When you’re behind, playing catch-up can be even harder.

Talk to a financial advisor.

In our experience at Linscomb & Williams, it’s never too late to make meaningful changes, and a financial advisor can give you the pros and cons of each option available to you.

Don’t put your retirement planning off any longer. Schedule a no-obligation conversation with the team at Linscomb & Williams today.

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MaryJane M. LeCroy, CFP®

MaryJane M. LeCroy, CFP®

As a member of our Atlanta team, MaryJane M. LeCroy is a Managing Director and Senior Wealth Advisor for Linscomb & Williams.

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Investment Advisory Services are offered by Linscomb & Williams, an SEC registered investment adviser, and a subsidiary of Cadence Bank. Linscomb & Williams (L&W) provides financial planning, investment management, and retirement plan and investment consulting services. L&W is not an accounting firm, and does not provide tax, legal or accounting advice.

Information expressed herein is based upon opinions and views of L&W and information obtained from third-party sources that Linscomb & Williams believes to be reliable, but Linscomb & Williams makes no representation or warranty with respect to the accuracy or completeness of such information. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.