Summer is over. Kids are back in school. It’s time to start thinking about sweaters, pumpkins, and how the holidays will be here before you know it. There’s one more thing you should potentially add to the list: checking in on your 401(k).

Last year, we saw more than 30 percent of investors play catch-up and make last-minute contributions to their 401(k)s. These investors made 10 percent or more of their total contributions for the year in December. In comparison, if this same group of investors had saved and contributed an equal amount each month throughout the year, they would have only needed to make 8 percent of their total contributions each month.

Being late to the party is not necessarily a bad thing. There are plenty of possible strategies for 401(k) investors who want to boost their savings rate in the last few months of the year, and there are plenty of investors who could be saving more. Individuals can contribute a maximum of $18,000 to their 401(k) accounts this year, and investors at the age of 50 or over can make additional “catch-up” contributions of up to $6,000.

However, most investors are not on track to meet that maximum this year. In fact, only 39 percent of investors who track their portfolios with SigFig are on track to max out their contributions to their 401(k) accounts so far.


So who are these latecomers? By and large, younger investors.

Older investors are more likely to max out. Only about 1 in 5 investors under 30 are saving enough to hit $18,000 by the end of the year. Meanwhile, 44 percent of investors in their 30s and 58 percent of investors in their 40s are on track to max out their contributions.

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Of course, there are plenty of reasons why younger investors might have trouble saving $18,000 over the course of a year. Younger investors are likely to be making less, and may be saving for other, more immediate goals, like a car or a house—or struggling to pay off student loans.

Unfortunately, delaying saving for retirement will have huge costs down the line. The math is firmly on the side of those who start saving early. If you manage to start saving when you’re 25, and you save $7,000 a year, you’ll have about $1.9 million when you hit retirement age. However, if you max out your 401(k) starting when you’re 25, you’ll end up with almost $5 million. Thanks to the power of compounding, those early dollars—the ones you cannot easily spare when you’re just starting out—are worth much more than any catch-up contributions you might make when you’re in your 50s.

There is still hope though. If, for example, you can’t save much during your 20s, but you start to ramp up your savings in your 30s, you could still end up with more than $3 million by the time you retire. Check out some of these other good reads for more tips around saving for retirement:

Sarah Morgan

Sarah Morgan is a freelance writer and editor based in Brooklyn. Her work has appeared on and in the Wall Street Journal.