He thinks it's imperative the club get back in the Champions League as soon as possible, but believes the right signings could help them get there sooner rather than later.
"First and foremost, we need to improve the team and the squad," Carragher told LFC Weekly.
"We're on a great run at the moment, but sometimes when that happens it makes you think that you don't need to change too much. You can't forget what has happened in the last 18 months because we're not yet where we want to be.
"But the manager has come in and we've been as good as anyone else in the league since then. Whether that changes minds about what we need to do over the summer remains to be seen.
"We need to get back in that Champions League - sometimes you look at it and think you're miles away. But you look at Schalke in the semi-final and Man United in the final - a team that we beat quite comfortably at home - and realise that with a few additions, we could be up there too."