How to Catch Up on Your Retirement Savings Goals

Concerned that your benefits, Social Security and personal savings are not enough to fund your retirement? Use these strategies to help boost your savings.

Couple doing work on a laptop

by NEA Member Benefits


Key takeaways

  • Catch-up contributions in a 403(b) plan can help you reach your savings goals quicker.
  • Delaying retirement may translate into higher pension and Social Security benefits.
  • Working in retirement provides additional income and may improve quality of life.

If you’ve calculated how much income you’ll need in retirement, good for you! That’s a big step toward understanding how to plan for a comfortable retirement.

It’s quite possible that your state pension benefits and Social Security (if you’re eligible) won’t provide all the income you’ll need. And that’s not surprising. Pension and Social Security benefits were never designed to be sole sources of retirement income. Given the trouble many teacher retirement plans are in and the possibility of reduced Social Security benefits due to the Windfall Elimination Provision or early retirement, it’s no wonder more teachers have been contributing to 403(b) retirement plans and other personal savings options.

But there’s even more you can do to tip the retirement income scales in your favor. Here are a few strategies that can help get you closer to your financial targets.

Save more through catch-up contributions

If you will be age 50 or older by the end of the calendar year, and you are making the maximum pre-tax contribution allowed by your 403(b) plan, consider making catch-up contributions over and above the regular IRS contribution limits, if your plan offers this benefit. For 2019, catch-up-eligible participants can contribute up to $6,000 on top of their maximum regular pre-tax contribution of $19,000.

Catch-up contributions are made on a pre-tax basis, so they help to reduce your taxable income and may lower your current income taxes. So it may be advantageous to start your catch-up contributions earlier in the year.

Adjust your lifestyle expectations

What you want to do in retirement and what you can afford to do needs to line up. If things seem a little out of balance, consider scaling back your travel plans or the size of that new business you’ve dreamed about starting to make your income go further. Often, cutting back just a little can make the difference between feeling secure or feeling like you’re just squeaking by.

Delay retirement

Full retirement age as defined by the Social Security Administration is between ages 66 and 67 depending on your birth year. Workers must be age 65 to qualify for Medicare. If you’re younger than these targets when you leave the workforce, you’re retiring “early.”

Retiring later may help boost your lifetime income in several ways.

  • Increased pension and Social Security benefits—These benefits are partially determined by your age when you apply for them. Check with your state pension administrator to see if working longer will increase your pension benefits. If you qualify for Social Security, each year you delay taking benefits starting at age 62 and up to age 70, will increase your lifetime monthly payout.
  • More years to save tax-deferred. The more years you continue to work, the more opportunity you have to save in a 403(b) workplace retirement plan. Money you save in these plans can grow tax-deferred until you start taking withdrawals, so you’re saving more and paying less in taxes. This could translate into additional income in retirement.
  • Fewer years in retirement. The longer you keep earning a paycheck, the less time you will need to rely on retirement income sources after the paychecks stop. This could make a big difference if you end up living a long and vibrant life after retirement.
  • Lower healthcare premiums. Generally, Medicare Part B premiums will be lower than those for private market health insurance.

Work for pay in retirement

For many Americans, retiring simply means leaving one career and moving into another. As an educator, you likely have numerous skills that could translate into interesting work for pay, such as:

  • Professional speaking
  • Freelance writing and editing
  • Research
  • Tutoring
  • Consulting
  • Sales

Earning money in retirement not only helps boost your income, it can keep you engaged, mentally challenged, and provide a renewed sense of purpose after a lifetime of classroom service.

Plan smart

There are a lot of moving parts when it comes to balancing your expected retirement income and your preferred retirement activities. By employing a smart combination of strategies—both raising income opportunities and moderating lifestyle expectations—you can become more confident about your future financial security.

Retirement planning solutions for NEA members