Mar 14, 2025
Saving for retirement throughout your career is important, but it doesn't always happen for everyone — especially if you’ve been through some challenges in your life, like a divorce.
If you’re 57 and working full-time making $170K, you're earning more than most people in your position, as the median annual income is roughly just $57,044 for women ages 55 to 64, according to the Bureau of Labor Statistics. That's the good news.
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The not-so-good news is that if you have only $60K in a 401(k), you’re behind on retirement savings, as you'd ideally have between 4.5 and 8 times your income invested by this point, according to T. Rowe Price.
If you have three kids (two of whom plan to live with you), you help out your mom financially and have $4,000 in medical bills you're paying down monthly, you're in an even tougher position — especially if you have no income left over after covering these costs.
Fortunately, you may own your house, and if it's worth roughly $1.5 million in the current market and you have, say, a $600,000 mortgage at 3.25%, you have a pretty valuable asset that could potentially help you boost your savings.
However, it all depends on just how much you can downsize given your family's needs.
So, if you've found yourself in this situation, you may have a chance of catching up and retiring with the security you deserve — if you’re willing to make a few financial adjustments.
Do the math on tapping into your home equity
The first big thing you can do, given the state of your finances, is to look into whether you can downsize your house.
If you could sell a $1.5 million home and use the proceeds to pay off a $600K mortgage, you'd end up with around $900K not including fees and expenses.
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Now, you probably don't want to invest that entire amount, although doing so could go a long way toward getting you caught up. That's because mortgage rates are much higher now compared to the 3.25% that you're currently paying.
If you invested the proceeds from your home and borrowed to buy another property, you may not drop your payment much at all. However, you could pay cash for a home, as the average U.S. home value is $357,138 according to Zillow. If you bought a home of this value, you could invest a little under $500K once you account for transaction fees.
Having $560K invested at 57 puts you in a much better place. In the best case scenario, your investments could grow 10% annually on average over the next 10 years until your full retirement age of 67, leaving you with $1,452,495 to live on — even if you never contributed another dollar.
At a safe 3.7% withdrawal rate, that would produce around $53,742 to live on each year.
While downsizing your home may not be something you want to do, it could be the simplest and fastest way to get out of your retirement troubles.
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Maximize contributions to your retirement plans
Maxing out your contributions to retirement plans could also help you get back on track — especially if you feel you can't sell the house due to your family's needs.
At a $170K annual income, you may be able to contribute the max to your 401(k) if you watch your budget carefully. That's $23,500 in 2025 and an additional $7,500 in catch-up contributions for a total of $31,000.
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If you invest that much every year for the next decade, on top of the $60K you're starting with, you could have over $700,000 by the time you hit retirement age.
While that's not as much as you'd have if you sold your home, it would still provide around $25,900 in retirement funds to supplement your Social Security. You'd have to cut spending and probably downsize your home anyway at this point to afford to live on that income, but you may be able to make it work.
Since the 401(k) contribution limit will go up over time, and since the SECURE 2.0 act also created large super-catch-up contributions for those ages 60 to 63, you may also be able to invest more than this amount in the coming years to get closer to your target income replacement rate.
Delay retiring
Delaying retirement is another option to help you catch up and it could benefit you in a few different ways.
If you waited until 70 to retire, you could have an extra three years to invest and grow your wealth. You could also qualify for delayed retirement credits that increase your Social Security checks by 24% compared to your standard benefit and could rely on your savings for less time.
Ultimately, you'll have to decide if you want to cash in on home equity, aggressively invest in your 401(k) plan, delay retirement or choose some combination of all three techniques. The good news is that you do have options and your retirement isn't doomed — you just need to decide on a path forward.
Speaking with a financial advisor could ultimately be your best bet in making this choice, as your advisor could help you determine which approach makes the most sense given your income, family needs and retirement goals.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
