You Can't Get a Loan for Retirement: Why Late Starters Should Fund Their Own Future Before College Savings

Retirement planning for late starters should come before funding education accounts because retirement lacks financial aid options. Education can be financed through loans, work, credit transfers, scholarships, and other assistance, while retirement at older ages cannot. A late starter in their 50s with a thin 401(k) faces a large gap between current savings and typical targets by retirement age. Closing the gap requires using IRS catch-up provisions and higher contribution limits available in later years. With current limits, catch-up contributions to 401(k)s and IRAs can generate substantial additional retirement contributions before market returns and employer matches. Redirecting savings to a 529 instead can leave retirement underfunded and force children to support the parent later.

"“you can't get a loan for retirement.” “Your financial independence is a gift to your children for their own financial independence,” he said, because the alternative is a tax your kids pay later in the form of supporting you."

"Late starters should fund retirement first. The reason is that retirement has no financial aid office. A student can borrow, work, transfer credits, or apply for scholarships. A 67-year-old with $38,176 in median 401(k) savings (Vanguard's 2025 figure) cannot."

"Run the numbers on a 50-year-old earning $90,000 with $120,000 saved. Fidelity's guideline says they should already have 6x salary by age 50 and 10x salary by age 67. That is a $900,000 target at 67 against a $120,000 starting point. To close that gap, the 50-year-old needs to use every catch-up tool the IRS offers."

"The standard 401(k) employee deferral is $24,500. At age 50, the catch-up bumps the total to $32,500. From ages 60 to 63, SECURE 2.0's super catch-up lifts it to $35,750. IRAs add another $7,500, plus an $1,100 catch-up at 50. A late starter who funnels $32,500 a year into a 401(k) from age 50 to 60, then $35,750 from 60 to 63, captures roughly $360,000 in contributions before any market return or employer match."

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