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Haven’t Turned 50 Yet? You Can Still Save $800,000 Before Retirement

Never being able to retire is one of Americans’ biggest fears, according to GOBankingRates’ 2015 Life + Money Survey. Whether you’re over the hill or coming upon it, it’s never too late to save for retirement — even if you slacked off earlier in life.

Depending on your savings strategy, you can still put away half a million dollars or more for your retirement years. Find out how to start saving for retirement in your 40s or 50s.

Read: 1 in 4 Baby Boomers Fears Never Being Able to Retire, Survey Finds

Saving for Retirement in Your 40s — You’re Not Alone

In a survey by the Employee Benefits Research Institute, 57 percent of Americans reported having less than $25,000 saved for retirement, excluding the values of their primary homes and defined benefit plans. Of these individuals, 28 percent reported having less than $1,000 in savings.

Even if you are behind on savings, you still have another 20 years or so to work and save. Saving for retirement in your 40s simply means you need to be more aggressive in how much money you put away.

How to Save $800,000 by Retirement

John Cavanaugh, certified financial planner and chartered retirement planning counselor at Cavanaugh Financial Group, said that if you are able to save $500 a month between the ages of 45 and 65, you will have over $260,000 when you retire, assuming 7 percent growth year to year. If you are able to put away $1,000 a month, you will end up with $520,927.

If your employer offers a match on your 401k, 403b or other retirement savings plan — take advantage of it. An individual earning $120,000 a year and putting away 10 percent of that — $1,000 a month — and receiving a full match to 6 percent of his salary would be able to save $833,482 in 20 years, assuming 7 percent growth year to year. If you put away $500 each month on the same salary, your retirement fund will grow by $520,927 by retirement, added Cavanaugh.

Even if your budget is tight, saving a couple hundred dollars every month can pad your retirement fund. Consider how your savings will grow by age 65 if you start making $200 monthly contributions at 40, 45, 50, 55 and 60.

How to Maximize Retirement Savings

To make the most of your retirement savings strategy, consider the following:

Saving for Retirement at 50

At the age of 50, the IRS allows you to ramp up your retirement savings with catch-up contributions. If you’re starting savings without anything in your 401k, you’ll need to make aggressive contributions.

This year, Americans are allowed to put away a maximum of $18,000 in 401k plans. Those 50 and older can save an additional $6,000 with catch-up contributions. If you are 50 or older, you can set aside another $6,500 in your traditional IRA or Roth IRA.

Stretch Savings by Downsizing Your Life

Even if you have hefty savings, maintaining your lifestyle after retirement can be a challenge. You can boost savings and make retirement less of a number crunch by trimming the fat off your budget.

Say, for instance, you still live in the three- or four-bedroom house where you raised your children. If you sell your home for a smaller property, you can cut home maintenance costs and potentially property taxes, among other expenses.

Other retirees choose to continuing work part time in order to fill their empty schedules and pad their monthly budgets. Some find a new home in college towns where they can teach courses in a field they love. Others become consultants, electing to move to cities where their industry is thriving.

No matter how you choose to approach your retirement years, you can find ways to trim costs and ramp up savings. If you need additional help, you can speak with a financial planner who can help you put together a retirement plan that suits you.