When it comes to saving for retirement, the sooner you begin investing, the easier it is to accomplish your goals.
But sometimes life gets in the way, and you might be behind in where you'd prefer to be in retirement planning. But it's never too late to take these three steps to shore up your financial security in your later years.
1. Claim tax breaks for retirement savings
If you are still earning income, you still have the option to invest in tax-advantaged accounts that help your retirement savings grow.
You can claim a deduction in the year of your contributions if you invest in a traditional 401(k) or IRA. And both accounts allow you to make catch-up contributions after you've reached age 50. That means that you can make a larger tax-deductible investment than your younger counterparts.
Depending on your income, you might also be able to claim the Saver's Credit, which could essentially provide up to $2,000 in free retirement savings from Uncle Sam. By claiming as many tax breaks as possible, you can supercharge your retirement savings and catch up on your investing.
2. Minimize your retirement tax bill
Taxes can take a bite out of your retirement income, but there are steps you could take to limit them.
You can avoid federal taxes on your retirement account distributions if you choose a Roth account. Unfortunately, if you already have your money in a traditional IRA or 401(k) and are nearing retirement, it's often not a good idea to convert your account because you could end up having to wait five years before you can make tax-free withdrawals after the change.
If you haven't started retirement investing, though, you can put your investments into a Roth so you don't have to worry about being taxed on your withdrawals. If you're starting late, cutting your tax bill could help your retirement savings stretch further.
And regardless of what type of retirement investments you have, you may be able to eliminate or avoid state taxes altogether by being strategic about where you spend your retirement years. It's never too late to make a move to a more tax-friendly locale.
3. Maximize your Social Security checks
Finally, if you haven't claimed Social Security benefits yet, you can still take steps to increase retirement income by waiting to file for checks.
Seniors become eligible for retirement benefits at 62, but every retiree has a full retirement age between 66 and 2 months and 67 depending on birth year. Waiting at least until you reach this milestone enables you to get a larger payment than if you'd claimed earlier since you avoid early filing penalties applied for each month you start your checks ahead of it.
For those who are way behind on retirement savings, it could be worth trying to wait even beyond your full retirement age. If you do, delayed retirement credits can be earned for each month of delay until age 70. These can raise your Social Security benefit by two-thirds of 1% per month or 8% annually.
By maximizing your Social Security checks, living in a tax-friendly state for retirees, and continuing to save as much as you can (and claiming as many tax breaks as you can), you might still be able to have a great retirement even if you are behind on hitting your savings goals.