Smart Financial Moves to Make in Your 50s

With retirement knocking at the door, your 50s are a time for building wealth and fine-tuning your finances in preparation for life after your 9 to 5. In other words, saving for retirement at 50 is crunch time. And even if your road to 50 has had its share of financial bumps along the way, you can still make adjustments, make a plan and make your retirement as successful as possible.

8 money moves to make in your 50s

A recent survey by the Federal Reserve found that among 45- to 59-year-old Americans, 83% had some retirement savings but only 40% felt their retirement savings are on track.¹ These smart money moves can help make sure you’re on track you plan for retirement in your 50s:

• Meet with a financial advisor. As you start mapping out your retirement plans, a financial advisor can help guide you in the right direction. If you don’t already have one, it’s important to find a financial professional that meets your specific needs and has a proven track record for helping people save for retirement at 50.

• Set a realistic retirement date. Most of us have dreams of retiring well before the standard retirement age of 67. If retiring earlier is within reach, your financial advisor can give you a few possible scenarios with various target retirement ages and what needs to happen financially between now and then to make your retirement dreams a reality.

• Map out your social security strategy. Visit the Social Security Administration’s website for your personalized retirement benefits estimate. On average, Social Security retirement benefits replace about 40% of pre-retirement income.² You can start receiving your social security benefits as early as age 62. However, the longer you wait, the higher your monthly benefit will be. If you’re married and you’re the higher earner, delaying your benefit may also mean higher survivor benefits for your spouse when you pass away.³ Take this and your family situation into consideration when deciding when to claim social security benefits.

• Make catch-up contributions to your retirement plan(s). If you’re wondering how to catch up on your retirement savings in your 50s, this is a great way to do it. In tax year 2022, you can contribute a maximum of $7,000 ($6,000 + $1,000 catch-up) to an Individual Retirement Account (IRA) and up to $27,000 ($20,500 normal + $6,500 catchup) to a 401(k) if you’re age 50 or older.⁴ This can give your retirement savings a significant boost. Plus, the tax deduction you can claim on catch-up contributions can save you over $1,000 on your annual tax bill, depending on your tax bracket.⁵ Talk to your financial advisor about how much you can afford to stash away in catch-up contributions to help build wealth in your 50s.

• Plan for long-term care. Now is the time to begin important discussions about how your physical health will impact your financial health as you get older. If you already have long-term care insurance, you’re one step ahead. If not, start making a plan now for how you would get day-to-day help with health care, housekeeping, meals and personal care if needed. Include the entire family in the conversation because this impacts everyone.

• Keep your debt in check. You may have taken out student loans to pay for your or your children’s education. Or maybe you’re still paying down credit cards and other debt. If your debt is significant, keep working on trimming as much of it as possible, while you still have the income to do so. This will be a factor for how to build wealth in your 50s.

• Practice living on less. Even with a retirement strategy in place, the reality for most of us is that we will have to get used to living on less income during retirement. So get into practice now. If you can swing it, try living on half of your current income for a month. It’s a good way to get a feel for what your household budget will look like in retirement—and show you where you should begin cutting expenses now.

• Make or revisit your estate plan. Now that you’re closer to retirement, you should give your estate plan a once-over to make sure it still makes sense for your family and financial situation. A divorce, sale or purchase of a home or property, death in the family, or a new grandchild could all be reasons for you to consider making changes to your will or estate plan.

If you do not have a will, make it a priority to create one. Remember, if you pass away without a will, the state, not your relatives, will have control of your assets. An estate lawyer can help you and your family put a plan in place that prevents that from happening.

Coming down the home stretch

Whether you’re building on your savings or catching up, the best way to save for retirement in your 50s is to make it your top priority. That means cutting unnecessary expenses so you can save more, preparing for your future health, housing, insurance and estate needs, and sticking to the retirement plan you and your financial advisor create. After all, retirement will be here sooner than you think.