Once you hit age 55, the time left until retirement is going to start getting really short. Those who started planning for retirement in their 20s will be in much better shape than those who waited to start until hitting 55. However, if you find yourself in the latter group, it’s still not too late to get started. 

Max Out Retirement Accounts

The 401(k) is the most common retirement vehicle for people who work in private industry. Getting as close to the maximum allowable contribution is a sure-fire way to increase your account balance before pulling the plug on work for good. Those who’ve reached age 50 have a higher limit because the IRS allows such workers to make catch-up contributions. These add $6,500 to the normal annual contribution limit. Making this additional contribution alone for a decade could lead to a six-figure difference in an account balance. It might not be possible for many people to max out their accounts because of relatively low pay, but it’s a good idea to save as much as possible. Even upping contributions by a percent or two can make a huge difference over time. 

Rethink Allocations

An aggressive portfolio allocation at age 55 can cause more damage than a similar portfolio at age 25. The younger saver has more time to recover than someone who is nearing retirement. An economic downturn of 20%, 30%, or 50% will hurt older workers more than anyone else because their portfolios are likely to be larger. Also, a 50% drop in a portfolio’s value would require a 100% return just to get back to even. Some finance professionals recommend holding your age in bonds. If you’re 55, that means 45% of your portfolio should be made up of stocks. The other 55% should be bonded. 

Consider Working Longer

If you’ve not saved much for retirement, it can pay you to work a little longer. Even a year or two can really help because it would shorten the amount of time you need to withdraw from your accounts. Additionally, it provides more time to allow accounts to grow. Social Security payments also go up every year until age 70 as long as a retiree holds off on claiming them early. 

Waiting until 55 to start planning for retirement is not a great idea. However, there are steps that you can take to avoid having no money for living expenses if you find yourself in that situation. It’s just important to start making positive changes immediately.