Breaks in your career? Here’s how to catch up on your retirement savings

Most of us haven’t worked steadily, without interruption, since we entered adulthood.

In fact, 62% of people have taken a career break. That break could have been voluntary—a leave to take care of a child, for example—or involuntary, such as a staff reduction.

Whatever the impact on your resume, a career break may also have an impact on your retirement savings. Even if you got a new job, you may feel behind on your retirement savings goals.

But career breaks and earning lulls don’t have to derail retirement savings goals. In fact, many people make tradeoffs in how much they save for various goals—retirement, college savings, to name just two. There are ways to assess what you have already saved for retirement and readjust your strategy in both the short and long term. Here’s what to consider.

Do you have some retirement savings? Try to preserve those funds.

It doesn’t matter if it’s a little or a lot: If you can leave your existing retirement savings untouched, you’ll preserve a base that can both grow in the interim and that you can add to in the future. Take this example:

*For illustrative purposes only.

Continue to strengthen your savings habits, even by small amounts.

It’s not true that there’s a set number of days it takes to build a habit. But it is true that different techniques—rewards, tech tools, sharing goals—work to build habits. That includes savings.

“The overarching goal is to save as much as you can, in as many ways as you can, so you can make the most of your years in retirement,” says Heather Winston, financial professional and product director for Retirement and Income Solutions at Principal^®. And whether or not you have a 401(k) and a job, there are options, including a traditional IRA and a Roth IRA, to save.

For example, perhaps as you start back to work after a break, you slowly build the percent you save in a 401(k). Or, if you pay off a debt, maybe that monthly payment can go into an IRA when it’s feasible. That’s OK. “It doesn’t have to be an all-or-nothing approach,” Winston says.

Review your retirement goal, then work backward.

Here’s what we mean: Say you’re committed to retiring at 66—no ifs, ands, or buts—and have a specific dollar amount you want to retire with. If you’ve had a career break but are now reentering the workforce, Winston says, your challenge is to map out how much you need to be saving.

“It’s a prioritization exercise: What are you willing to give up now so you can get there?” says Winston. If you’re not sure, check in with your financial professional to help review priorities and plans.

Fully fund retirement savings, including catch-up contributions and employer match, when you can.

Let’s say you are re-entering the workforce after a career break. Now your challenge is to take advantage of any opportunities you can to ramp up retirement savings. Start by saving enough in a 401(k) to get your employer match. Then, add to the percent you save in that 401(k) at least every year. At age 50, you can make up lost ground with catch-up contributions, and at age 60, save even more through that same tool. Read more about how catch-up contributions work. And if you’ve reached your savings limit at your workplace retirement plan, consider stashing funds in an IRA.

Get flexible with when (and how) you stop working.

Have you set a firm retirement date that is perhaps at odds with your retirement savings ability? That may mean you’ll have to work a little longer—even part time—to make up for any lost retirement savings from career breaks.

It’s an option more and more people are pursuing, whether they need to put more aside or just want to work a little longer. Sometimes referred to as phased retirement, about 34% of people age 50 or older either want to or already are embracing working past traditional retirement age.

Another reason to consider working longer? It may enable you to delay receiving Social Security: Wait at least until your full retirement age of 66 or 67 and your benefits increase, effectively increasing your retirement savings.

Rethink your retirement goals.

Maybe you dreamed about retiring somewhere that’s warm year-round—like the southwest. But the housing market in those states has you questioning whether that’s realistic.

Then the question is: What’s the balance you’re willing to strike between your savings and your dream? Are you willing to work longer, save more aggressively, choose a smaller property, or find a less expensive market to live in?

“Sometimes our vision and reality aren’t aligned. But no matter who you are, how much you have saved, or what your dream is, there are ways to make it come to life. Every decision point has tradeoffs,” Winston says.