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Savings Repair: 4 Moves to Catch Up if You’re Within 10 Years of Retirement

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Savings Repair: 4 Moves to Catch Up if You're Within 10 Years of Retirement

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The countdown clock is louder than ever, your retirement date is no longer abstract, and suddenly every financial decision feels like it matters more. That mix of urgency and possibility can be electrifying rather than terrifying, because this is the phase where smart moves still create dramatic results. You are not late to the game; you are simply entering the high-impact round where focus beats perfection.

With roughly a decade left, your choices can still compound, protect, and accelerate your future lifestyle. This is the moment to stop worrying about what didn’t happen earlier and start executing a plan that works right now.

1. Maximize Catch-Up Contributions Everywhere Possible

If you are 50 or older, retirement accounts unlock special catch-up contributions that act like turbo boosters for your savings. Workplace plans such as 401(k)s and 403(b)s allow higher annual limits, and IRAs offer extra contribution room as well. These increases may seem modest year to year, but over a decade they can translate into tens of thousands of additional dollars working for you.

Automating contributions removes emotion from the process and keeps progress steady. The real win is consistency, because every extra dollar invested now has less time to wait and more urgency to grow.

2. Get Ruthlessly Strategic With Your Investment Mix

As retirement approaches, investment strategy shifts from pure growth toward a balance of growth and protection. This does not mean abandoning stocks entirely, but it does mean understanding your risk tolerance with fresh eyes. A diversified mix of equities, bonds, and cash-like assets can help smooth volatility while still pursuing returns.

Rebalancing annually keeps your portfolio aligned with your goals rather than market noise. The objective is not to beat the market, but to arrive at retirement with confidence and stability.

3. Delay Retirement By Months, Not Decades

Working a little longer can have an outsized effect on your retirement readiness, even if the delay is shorter than you expect. Each extra working year means more savings, fewer years of withdrawals, and potentially higher Social Security benefits. Even part-time or consulting work can reduce pressure on your nest egg in early retirement. This approach offers flexibility rather than sacrifice, especially if you enjoy what you do. Sometimes the most powerful financial move is simply buying yourself a bit more time.

4. Shrink Future Expenses Before They Shrink You

Reducing expenses late in your career is about intention, not deprivation. Paying off high-interest debt, downsizing thoughtfully, or relocating strategically can dramatically lower your required retirement income. Every dollar you do not need to spend is a dollar you do not need to save or withdraw. Health care planning, including HSAs and insurance reviews, deserves special attention in this stage. Designing a leaner, smarter lifestyle now gives you control rather than forcing adjustments later.

Savings Repair: 4 Moves to Catch Up if You're Within 10 Years of Retirement

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Your Comeback Window Is Wide Open

Being within ten years of retirement is not a deadline, it is a launchpad. The actions you take now can rewrite expectations and replace anxiety with momentum. Progress at this stage comes from clarity, commitment, and a willingness to adjust old habits. Everyone’s path looks different, and real-world experiences often reveal strategies no spreadsheet can capture.

Jump into our comments section below and add your perspective or personal journey to keep the conversation moving.

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Is A 401K Worth It?

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is a 401k worth it

When you’re planning for retirement, classic advice usually states to take advantage of every plan option available to you. However, while a 401K can be an asset, that doesn’t mean it’s the perfect choice for every situation. If you’re wondering if a 401K is worth it, here’s what you need to know.

The Benefits of a 401K

A 401K has specific benefits that can potentially make one a worthwhile addition to your retirement plan. One of the biggest is its tax-deferred status. When you start contributing, you reduce your tax burden immediately since the payments typically come from pre-tax dollars. If you earn more money now than you will in retirement, you’ll potentially come out financially ahead.

Employer matches are another benefit of a 401K. Many companies will match employee contributions up to a specific amount. By contributing enough to capture the maximum, you’re essentially collecting the most “free” money possible for retirement.

In most cases, 401Ks come with a wide array of investment options, too. This allows you to choose a portfolio mix based on your comfort with risk, values, financial goals, and other factors. Plus, there are typically several asset classes available, including stocks, ETFs, money market funds, and more.

Finally, many 401Ks allow people to borrow against the account. Essentially, your account balance acts as collateral, and you can pay the amount back with interest over time. In some cases, these loans offer more favorable rates. Plus, if you repay the full amount before changing to a new employer, it typically won’t impact your income for tax purposes.

The Drawbacks of a 401K

While 401Ks come with some notable benefits, that doesn’t mean there aren’t drawbacks to consider. As a defined contribution plan, you’ll send an amount to the plan every paycheck regardless of market conditions. While the concept of dollar-cost averaging could reduce any harm from investing at inopportune times, it does mean you’ll sometimes invest during periods that aren’t offering the best value.

You may also have to contend with 401K fees. Precisely what that involves varies from one employer to the next, but they can add up surprisingly quickly, offsetting at least some of your earnings or actually causing you to spend more than you make during economic downturns.

It’s also important to note that some 401K plans come with surprisingly few investment options. You may have only a small number of investments to choose from, and most of what’s available may simply be mutual funds, particularly target-date funds.

Finally, while employer matches are typically one of the benefits of 401Ks, not all companies offer one. Additionally, some have very low matches, which can make a high-cost 401K a poor choice for some investors.

Is a 401K Worth It?

Generally speaking, a 401K can be worth it, suggesting you have a plan available that meets your needs. If there is a wide array of investment options, a generous employer match, and a reasonable fee structure, and you’re in a higher tax bracket now than you will be in the future, using a tax-deferred option like a 401K could be worthwhile. However, if none of that applies, there are more flexible options available, and it could be wise to explore them instead.

Do you have a 401K? If so, do you think it’s worthwhile, or do you believe that other retirement savings options are a better fit? How do you make the most of your 401K to ensure your financial future? Share your thoughts in the comments below.

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What To Do With Your Old 401k

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When you leave your job and you have a 401k, there are a few things you can do with it. You can leave it there, you can cash it out, you can roll it into an IRA, or you can roll it into a retirement plan with your new employer. So what should you do with your old 401k?

Theoretically, you have four options.

Withdrawing your funds

If you are under the age of 59 ½ and you withdraw the money, you’ll have to pay a tax penalty on it. UNLESS, you meet some of the exceptions: medical expenses, your first, primary residence (up to $10,000), health insurance premiums while unemployed, distributions from an inherited IRA, pay off an IRS tax levy, higher education expenses, as well as a few others.

If you don’t meet any of those criteria and you’re under 59 ½, you’ll have to pay that penalty. It’s not worth it. UNLESS you’re using that money to pay off a credit card. Credit card interest rates are usually well above 10%. So if you’re saving yourself from paying a 27% interest rate, theoretically, you’re making a 17% return on your money (27–10=17). But this calculation doesn’t account for taxes so you might come out even, or behind.

95% of the time, it makes the most sense to pursue other options.

Keep it where it is

Some people will leave their old 401k with their previous employer. I think a lot of that has to do with laziness, but it could be a good, rational decision as well. The primary factor has to do with cost. What are the expenses of the 401k? Typically, if it’s a large employer and/or a large plan with a lot of assets, the fees are going to be low.

That might be a good reason to leave it. The plan might also have good investment options. If the fees are reasonable, or at least average, then the investment options might be reason enough to stay.

Roll it to your new employer

Nine times out of ten, I’ll have people roll their old 401k into their new one. If they’re able to. Some employers don’t allow income transfers. Having everything with one firm makes managing it so much easier.

The only time I don’t think it would be appropriate is if the new firm has high fees, but it’s also important to compare the new fees to the fees of the alternative. That alternative is rolling it into an IRA at a separate firm.

Roll it into an IRA

As an independent financial advisor, this option is best for me, but not typically best for the client. If you take a standard fee for a financial advisor (1.00 %) and compare it to the standard expense paid by a 401k participant. Employers with 2,000 employees pay below 1% and employers with 50 or fewer employees pay 1.25%. Here’s some more info on that.

That might be the case if it’s a small plan. The large plans, however, can have ALL IN fees of around .5%.

As is the case with a lot of things in the finance world, the answer is not black and white. You need to compare and contrast your options and then make a decision. Here are things to consider: cost, investment options, ease of management, and customer service. How do the fees compare? What are the investment options? Do you have everything in one place and is it easy to make changes? Can you get in touch with someone if you have problems/questions?

Related reading:

7 Tips to Get the Most Out of Your 401k v/s Pension

401k Withdrawal Taxes and Penalties

Is your 401k Hurting you or Helping you?

How 401k Fees Impact Your Retirement

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Investment Tips: How much should I have in my 401(k)?

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Part of planning for financial freedom is making sure that you are financially protected when you hit retirement. However, only a few know how to maximize their 401(k) in a retirement investment account as part of their overall portfolio.

If you want to explore the basics of investing your 401(k) to increase your retirement benefits, no worries. This article provides you with a summary of the five (5) most useful tips on how your 401(k) can help you retire with more financial security.

What are 401(k) Investments?

Before going into the details, you should know that a 401(k) investment is basically a retirement savings tool sponsored by your employer. This tool allows you to invest a portion of your paycheck into a retirement investment account. Your money will grow tax-free until you are retired, and that’s when you can use it.

The question that many ask is about the portion: how much of one’s paycheck should go into this retirement investment? In addition to that, here are some tips about putting a part of your paycheck to your 401(k) investments.

Invest Early

It is true that you can begin your retirement investment later when you are older. However, the earlier you start investing, the better. In fact, it is best to start contributing to your 401(k) as soon as possible. In doing this, you earn more. That’s just how compound interest works: you gain more interest when you start earlier. If you are a young worker, you have the advantage of the time that older folks will never ever have. Invest early.

See How Much You Can Set Aside

As a rule of thumb, you need to invest a percentage of your earnings that is equivalent to the difference between 100 and your age. For instance, if you are 20 years old, you need to invest 80% of your earnings as savings or into your retirement fund. This is based on the assumption that, at an early age, you still don’t have many responsibilities and can afford to invest more money.

If that amount or percentage is too high, you can decide on a fixed annual amount. For example, you can contribute a max of $19,500 to your 401(k) in 2020 if you are under 50. All you have to do is calculate a fixed amount below the threshold of $19,500.

Hire a Portfolio Manager

Still unsure or want to maximize your investments? You can explore other options such as using a robo-advisor such as Wealthfront or Betterment. This is one of the best options for someone who is unsure or does not know how much they should invest.

The robo-advisor will run the numbers for you to determine the best combination of investments in your 401(k) fund. You can set the target amount you need for retirement and the algorithms will compute how much you need to set aside every month or year so that you can have that amount when you retire.

Match Your Employer

Another way to determine how much you should contribute in your 401(k) is to look at how much your employer is contributing. For instance, if your employer only offers a maximum of 10% of your salary, then you should match your employer and contribute at least 10% as well to get the most out of your 401(k) investments.

Check Investment Types

When you contribute funds to your 401(k), you have to choose which investments it goes to. With each kind of investment, there is a specific percentage of return based on the risk profile. Since the percentage of return is different for each investment, your choice will affect how much you need to contribute in the 401(k) so that you can reach your target retirement funds.

If you have enough in your 401(k), before you start computing, consider the types of investments that you will choose. For instance, if you choose to invest in the stock market, you will earn more and faster but the risk is higher. If you want to do this, you might want to invest a lower amount.

On the other hand, you will have more stable returns if you invest in mutual funds. However, interest will be less so you want to contribute a higher amount to achieve the retirement fund levels that you want.

Takeaways

For dignity and independence, you want to retire with enough funds so that you won’t need to depend on help from your children or other people. With the investment tips summarized in this article, you can think about your best options to save and invest money in your 401(k) for your retirement. The five (5) points summarized in this article should help you begin to find the answers to all your basic questions and concerns.

For more great articles from The Free Financial Advisor, consider these:

Financial Planning Basics – The Financial Pyramid

How Long Should You Keep Financial Records After A Death

What Advantages Are There To Saving Money In The Bank?

How To Recover Paystubs From Your Old Job

The Definition of Irony (or Why You Should Know What You’re Doing)

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I know sometimes I might sound a little cranky (like yesterday, for example).  But here’s a good reason why….I can’t make this stuff up.

Some back story:

As an advisor, one of the most common requests I’d receive was to help someone choose which funds to pick inside their workplace retirement plan.

Most companies have one – either a 401(k), 403(b), SEP, SIMPLE, or something…  Each of these plans was sold to the company owner by a salesperson financial advisor.

Who picks which funds are appropriate to include in the account?  Who makes the (hopefully) long list of choices you and I can oogle while we decide which is best for your retirement?  The owner chooses, but she is handed a list by the  salesperson financial advisor.  99 percent of the time, the owner doesn’t hav the time or inclination to second guess the choices, so they accept the “professional” recommendation.  If you work for a large corporation…then who picks the funds?  A committee…combined with the salesperson financial advisor.

What happens when your 401(k) fund choices just plain suck?  Do you have any repercussions? 

Apparently, you do.  And this is where our story begins……

At Ameriprise Financial, (they’re a middle-of-the-road financial “planning” firm) employees are eligible for their own 401(k) plan.  One of the nice bonuses for those working in the industry, is that you may happen to have an in-house mutual fund department.  Ameriprise does.  Awesome!  And, you may have your very own retirement plan operation.  Ameriprise does.  Cool beans! 

When you sell funds for a living, you would suspect there’d be awesome choices in your plan…right?  You’d skip to work every day, whistling with joy and pinching yourself that you work for the company that knows how to deliver the bacon when it comes to retirement plans.  It’s kind of like owning the golden goose.

But it isn’t.

According to Nathan Hale at CBS MoneyWatch, Ameriprise funds inside of the Ameriprise 401(k) suck SO BAD that employees are SUING the company to get out.

Wait.  Did I read that correctly?

Financial advisors are suing their own company for forcing them to eat their own cooking?  HA HA HA HA.

That, folks, is the definition of irony.

It may also be why Joe’s had a case of the crankies.

This is specifically why planning your own future is non-negotiable.  If you want to achieve your goal, know what you’re doing yourself.  It’s okay if you need to hire an advisor, but don’t just hand them the keys to your car, jump in the back and expect to reach the place you want to go! 

Do your own homework.  In this case, the stuff that’s peddled by these salespersons financial advisors is so atrocious, they wouldn’t own it themselves (the cynical part of me thinks they might still sell it to their mother, though, if there’s a bonus in it).

Don’t let a salesperson tell you to “stay the course, Mr. Smith.  It’ll be OK”  if it clearly isn’t the case. Over the next several weeks, I’m going to show you some of the cool tools you can use for FREE on the internet to do your own homework. Even if you have an advisor, you should know how to double-check her work. 

That should be exciting, huh?  For now, I’m going to keep giggling to myself about this story.