There’s been a financial retirement crisis in the United States for years. At age 65, the typical American has just $200,000 saved across their household. This crisis could get worse over the coming years as post-pandemic inflation has ballooned key living expenses, such as rent and groceries.

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People must create a plan to save for retirement during their working years, and it’s easier to start early, when the power of compounding has more time to work its magic on your nest egg. But what if you’re starting late?

First, try not to panic. Simply realizing that you must plan for retirement is a fantastic first step, as it plants the seeds for taking action.

Right now, it’s crucial to begin laying the foundation for your future. Here are four strategies to help late planners catch up to where they should be.

1. Establish a budget and look for waste

Knowledge is power. Creating a budget can be the most impactful tool you have to change your financial trajectory, as it gives you a detailed view of where your money goes. If you’re late saving for retirement, there’s a good chance you’ve already been working for a while. Your tastes may also have gotten more expensive as your income rose.

You may be surprised to learn how much money is taken from your bank account for mindless purchases and subscriptions. In order to find them, you’ll need a monthly budget to analyze and look for cuts to make up financial ground.

Do you need to subscribe to every single streaming service? Does your vehicle need all the fancy options? Are you ordering takeout five nights a week? The more cash you can free up, the faster you can catch up.

2. Eliminate high-interest-rate debt

Once you have extra monthly cash, you’ll want to eliminate high-interest-rate debt, like payday loans and credit cards. People tend to think about how much their money can earn when they invest, but not how much they pay when they carry debt. In other words, you’re far better off paying off that credit card with a 25% interest rate than investing that money and almost certainly earning less than 25% per year on your investment.

Ultimately, the less debt you have, the less money you’ll need to cover your living expenses in retirement. Late starters may be unable to pay off low-interest loans, like their mortgages, before retiring, but eliminating high-interest-rate debt will trim their cost of living and free up even more money to build their savings.

3. Lean into retirement accounts

Having a budget and paying off high-interest-rate debt can help stop any financial bleeding. The next step is to save toward retirement by contributing to a retirement account. The most common accounts include employee-sponsored accounts, such as a 401(k), and individual retirement accounts, like traditional and Roth IRAs.

These accounts generally offer tax benefits that could reduce your taxable income during your working years. If you have a 401(k), there may be a company match, where your employer chips in additional money to match your contributions, up to a specified amount.

A 401(k) match is as close to easy money as possible, so do your best to maximize it. You can use all the help you can get when playing catch-up with your retirement savings.

4. Take some risk, but don’t get reckless

Consider investing your money to help it grow until you retire. There are numerous ways to do that, and you should consult a registered investment advisor if you need guidance in formulating the best plan for you.

The key is to take enough risk to grow your money, but not too much. Riskier assets might not be the best idea when you’re catching up and have less time to recover from catastrophic losses if things go wrong.

A diversified portfolio of mutual funds with exposure to stocks, bonds, and other investments could help you strike that delicate balance. The S&P 500 is a U.S. stock market index of 500 prominent U.S. companies. It can be volatile at times and occasionally experiences steep downturns. However, it has gained value in roughly 40 of the past 50 years, with an average annual return of 9.4%. Therefore, an S&P 500 ETF is a great way to invest.

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