Every now and then, someone sends me a question that begins with refreshing honesty.
Not the polished, carefully worded kind of question.
The blunt kind.
The kind that probably describes more people than we care to admit. The kind that matters. The kind I like.
No spreadsheets.
No grand financial plan.
No tidy binder labeled “My Retirement Strategy.”
It’s usually a vague feeling (or concern) of “Have I screwed something up?”
Reader Question
A dear friend of mine asked:
“Let’s pretend I’ve done basically nothing to prepare and while I love what I do and would do it forever — shit happens.
How do you get started with a late start?”
That might be the most accurate retirement planning sentence ever written.
Careers end. Health changes. Companies restructure. Life throws curveballs.
Which leads to the obvious question:
If you’re starting late… where do you begin?
The good news is that starting late isn’t the disaster people assume it is. Plenty of people reach their 50s or early 60s without a formal retirement plan. Heck, there’s folks in their 80s without a plan. Let’s face it, lots of folks just wing it. (Which honestly is not a good idea.)
What matters now isn’t what you didn’t do twenty years ago.
What matters is what you start doing next.
The short answer? Start with clarity and focus.
Quick Summary (For the Skimmers)
If you’re starting retirement planning late:
- Know your spending. Retirement planning begins with real numbers.
- Maximize catch-up savings. The tax code gives people over 50 extra room to contribute.
- Understand Social Security. For many retirees, it becomes the foundation of their income.
- Use self-employed retirement plans. SEP IRAs and Solo 401(k)s allow large contributions.
- Reduce major expenses. Big financial leaks matter more than small ones.
- Build flexibility. Retirement doesn’t always mean stopping work entirely.
The goal isn’t perfection.
The goal is a workable plan built on reality.
Step 1: Figure Out What Your Life Actually Costs
Before worrying about investments, Roth conversions, or Social Security strategies, start with a simpler question:
What does your life cost today?
Not a generic retirement estimate from an online calculator.
Your real spending.
Look at the past year and group expenses into three buckets.
Essential spending
- Housing
- Food
- Insurance
- Healthcare
- Utilities
Lifestyle spending
- Travel
- Hobbies
- Dining out
- Entertainment
Irregular spending
- Car replacement
- Home repairs
- Helping family
- The occasional “life happens” expense
Once you know your spending, retirement planning becomes much less mysterious.
It becomes a straightforward question:
How do I generate enough income to support this life?
Software Tip: I use a product called Tiller to track every expense. It's spreadsheet-based and can automatically pull in data from investment and checking accounts as well as credit card transactions. It's an amazing tool for tracking expenses.
Step 2: Identify Your Future Income Sources
Next, map out where retirement income might come from.
Most retirees rely on some combination of:
- Social Security
- Retirement accounts (IRAs, 401(k)s)
- Taxable investments
- Pension income (less common these days)
- Part-time work or consulting
For many households, Social Security becomes the foundation of the retirement paycheck.
Create an account at SSA.gov and review your earnings record. Then compare benefit estimates if you claim at:
- Age 62
- Full Retirement Age
- Age 70
The difference between those options can easily add up to thousands of dollars per year.
Step 3: Use the Catch-Up Years Aggressively
Once you turn 50, the IRS gives you a helpful boost.
You’re allowed to make catch-up contributions to retirement accounts.
| Account | Standard Contribution | Age 50+ Catch-Up |
|---|---|---|
| 401(k) | $23,000 | +$7,500 |
| IRA | $7,000 | +$1,000 |
That means someone in their 50s can potentially shelter tens of thousands of dollars per year from taxes.
If you’re starting late, those contributions matter. A lot.
Time is shorter, so the strategy shifts from “slow and steady” to focused and deliberate.
Step 4: Self-Employed? You Have Powerful Options
The reader who asked this question is self-employed. That’s actually a bit of an advantage.
Self-employed retirement plans allow much larger contributions than many people realize.
Two of the most common options:
SEP IRA
A SEP IRA allows contributions of up to 25% of net self-employment income, up to the annual IRS limit.
Recent limits have been around $69,000, adjusted periodically for inflation.
Pros:
- Simple to set up
- High contribution limits
- Minimal administrative work
Cons:
- Contributions are employer-only
The IRS provides a clear overview of SEP IRA contribution rules for self-employed individuals.
Solo 401(k)
A Solo 401(k) is often the most powerful option for self-employed professionals.
You contribute in two roles:
Employee (you)
- Up to the standard 401(k) contribution limit
- Up to 25% of compensation
Employer (can also be you, if you’re self-employed)
Combined contributions can reach the same high limits as a SEP IRA, but with more flexibility.
Many Solo 401(k)s also allow:
- Roth contributions
- Loan provisions
- Larger contributions at lower income levels
(As always, confirm the details with a tax professional. The math around self-employment income can get a little… IRS-ish.)
Step 5: Plug the Biggest Financial Leaks
Late starters benefit enormously from tightening up a few key areas.
Forget penny-pinching. In the grand scheme of life, canceling Hulu, or
Look for large structural improvements:
- Paying off high-interest debt
- Downsizing an oversized home
- Cutting recurring expenses you don’t value
- Avoiding lifestyle inflation during peak earning years
Here’s a helpful way to think about it.
Cutting $1,000 per month from spending doesn’t just free up $12,000 per year.
In retirement math, it may reduce the amount of savings required by $250,000 or more, depending on assumptions.
Step 6: Rethink What Retirement Might Look Like
When people say they’re starting late, there’s often an assumption hiding underneath:
Retirement means completely stopping work.
But for many people—especially those who enjoy what they do—that’s not necessarily the goal.
Plenty of retirees ::raises hand:: choose some version of:
- Consulting
- Part-time work
- Passion projects that generate income
Sometimes the best retirement strategy isn’t squeezing every last dollar out of a portfolio.
Sometimes it’s simply working a little longer, on your own terms.
Late Starter Action Checklist
If you’ve done little retirement planning so far, start here:
✔ Review your actual annual spending
✔ Create a Social Security account and review benefit estimates
✔ Max out catch-up retirement contributions
✔ If self-employed, explore SEP IRA or Solo 401(k) options
✔ Pay down high-interest debt
✔ Build a simple retirement income estimate
✔ Think about how part-time work or consulting could fit into retirement
You don’t need a perfect plan.
You just need to start making better decisions going forward.
One Last Thought
If you’re starting late, it’s easy to feel like you’ve already missed the window.
You haven’t.
The best time to start retirement planning was twenty years ago.
The second-best time is today.
And a focused decade of smart decisions can change the trajectory of retirement far more than most people expect.
Continue Exploring the Six Pillars
Retirement planning isn’t one decision. It’s a series of connected ones.
If this topic was helpful, these articles build on it:
- Income: Designing Your Retirement Paycheck
- Taxes: Why Roth Conversions Matter in Retirement
- Social Security: Claiming Strategies That Can Increase Lifetime Benefits
Together they form part of the Six Pillars framework behind Retired.Living.
Dockside Reflection
Out here on the coast, mornings have a way of reminding you that most things in life unfold a little at a time.
Retirement planning works the same way—one decision, one adjustment, one step forward at a time.
If you have a retirement question you’d like explored here on Retired.Living, send it my way. Chances are you’re not the only one wondering.
email [email protected]
2 comments
I agree with everything you have shared and experienced some of it already. I can testify that that there are simple versions of retirement that can be very satisfactory. I started several years ago (now 65) reducing expenses and paying off accounts, rather than tucking money away. I now live on a $2,000 Social Security benefit that covers a small remaining house payment ($600 PITI), car insurance, Medicare for minimal needed medical, utilities, groceries, and a few other items. I secured a part time job as I choose hours for to save a little for unexpected or entertainment expenses. I am also in a lower cost of living area (MS) so taxes and necessities don’t gouge me. I hope your message spreads to others and offer my experience as an example that simplifying can produce very comfortable results if investing never occurred.
Good for you, Paul! You make terrific points in your comment, thanks for that. There’s definitely more than one way to “skin the retirement cat,” and you’re living proof of that!