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7 Steps to Start Saving for Retirement After 50

It’s never too late to start laying the financial groundwork for your future

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“In a perfect world, we would all begin saving [for retirement] from the time we receive our first paycheck,” says Nicole Gopoian Wirick, a certified financial planner (CFP) in Birmingham, Michigan. “But we know life isn’t perfect, and sometimes a late start is unavoidable.”

And very common. A May 2022 Federal Reserve report found that 25 percent of nonretired adults have no retirement savings and only 45 percent of nonretired adults ages 45 to 59 believe their retirement savings plan is on track.

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If you’re 50 or older and anxious about retirement, you can still build your stash — with the right moves. “It’s never too late to develop a comprehensive financial plan that is aligned with your objectives,” Wirick says.

Consider this methodical approach recommended by financial planners across the country. You may want to consult a planner in your area for advice that’s specific to your situation.

1. Refine your budget, and set up automatic savings

First, to free up cash, review your budget and eliminate any excess. Food, for example, is one area where many people overspend, says Nadine Marie Burns, a CFP in Ann Arbor, Michigan. “Making a meal plan could save over $100 per month on discarded or unused items.”

Next, calculate a realistic savings goal and figure out how much you can save automatically on a regular basis, Wirick says. If that’s overwhelming, focus on making small changes over time. 

And keep in mind that you might have a lot of time. “Plan on living a really long life, possibly into your 90s, and do your retirement income calculations accordingly,” says George Gagliardi, a CFP in Lexington, Massachusetts. 

At 50, the average American man can expect to live another 30 years, to 80, and the average woman another 33 years, to 83, according to Social Security Administration data. At 65, the average life expectancy is 83 for men and nearly 86 for women.

2. Pay down debt

Got credit card debt? Pay it down as quickly as you can to free up more cash to save.

Malcolm Ethridge, a CFP in Rockville, Maryland, also recommends creating a plan to pay off your mortgage by the time you retire. “Eliminating housing expenses reduces the amount of income you will need to replace on an annual basis,” he says. 

And take steps to avoid future debt, says Natalie Pine, a CFP in College Station, Texas. For example, she suggests that when you pay off a car loan, start putting equivalent monthly payments into an account for a new car “so that eventually you can pay for a car in cash and overall pay less.”

3. Stay invested

If you have a nonretirement portfolio or if you’re self-employed and administer your own retirement fund, be sure to set up automatic investments so you can take advantage of dollar cost averaging. With regular investments, you’ll buy more shares when stock prices are cheaper and fewer when they are expensive, and you don’t get caught up in trying to time the market.

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You want a mix of different types of investments — with at least 60 percent in stocks — that is aggressive enough to help you reach your goal over time, says Sandra Adams, a CFP in Southfield, Michigan. But don’t take so much risk that you’re tempted to cash out when the market drops. 

“Jumping in and out of the market can cause huge setbacks in your plan, and if you are already starting late, you can’t afford those setbacks,” Adams says.

4. Max out your contributions, if you can

If you have a retirement plan at work, contribute enough to get the maximum match offered by your employer, says James Shagawat, a CFP in Paramus, New Jersey. In 2023, “you can contribute up to $30,000 if you’re 50 or over,” he notes — the $22,500 standard limit plus the $7,500 catch-up contribution the IRS allows for those age 50 and up. You should also ask if your company has additional retirement savings plans available.

One caveat: If your employer matches with company stock, you may become subject to “concentration risk,” which T. Rowe Price broadly defines as having more than 5 percent to 10 percent of your portfolio invested in one stock. Above that level, poor company performance could affect your overall returns.

You can balance that with contributions to a Roth IRA with diversified investments. Because Roth contributions are made with after-tax dollars, your withdrawals won’t be taxed when you start taking them in retirement. 

For the 2023 tax year, you can put up to $7,500 in an IRA if you are 50 or older. You can make the maximum contribution if your modified adjusted gross income (MAGI) is less than $138,000 for an individual taxpayer and $218,000 for a married couple filing jointly. Eligibility to contribute is phased out at higher income levels.

You can make one year’s contributions up to the tax-filing deadline in April of the following year, but it’s a good idea to make them as early in the tax year as you can, says Justin Meinhart, a CFP in Winston-Salem, North Carolina: “You can pick up more than a year of growth and compounding on those dollars.”

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5. Plan for emergencies

Maintain an emergency fund so you can cover unexpected expenses without having to dip into your retirement stash (or pay the taxes or penalties that typically come with early withdrawals from retirement accounts). 

You can build it by depositing any raises or bonuses you receive, Pine says. And starting in 2024, employers can choose to enroll workers in emergency savings accounts linked to their company retirement plans (and similarly funded by payroll deductions), providing another potential source of rainy-day money.

Think about insurance, too, including disability coverage, Pine advises. “If you can’t work anymore at 50 and haven’t saved, it is going to be hard to come back from any setback,” she says. “Make sure you have proper home, auto, umbrella policies. Make sure you have health insurance.”

6. Look for “found money” or a side gig

Still need more cash? Find a part-time job you’ll enjoy, or sell possessions you no longer want via an auction or by using one of the many “sell your stuff” apps

You might also consider selling your home and moving to a smaller place or to an area with cheaper housing costs, says Benjamin Offit, CFP, of Towson, Maryland. Downsizing can mean considerable savings that you can stash for the future.

Finally, check out your state’s lost asset site to find any old accounts you may have lost track of, says Sarah Carlson, a CFP in Spokane, Washington. 

“If you have had other employers, you may have accounts that were turned over to the state,” she says. “My clients have reconnected with money they forgot they had, or lost connection to, because they moved and never received documentation.”

7. Work as long as you can

Gone are the days when folks retired at 60 or 62, says Sean Pearson, a CFP in Conshohocken, Pennsylvania. Some of his happiest clients work past 60 or 65 — perhaps not in a high-stress, 40-to-50-hour-a-week job, but in something lower key. And under federal legislation passed in 2019, there are no longer any age limits on contributing to IRAs. 

“For every year you continue to earn income and save, that is one less year that your savings needs to pay for you in retirement,” Pearson says. 


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