12 Money Moves Everyone Should Make in Their 50s

Mature senior couple
Monkey Business Images / Shutterstock.com

Your 50s are a pivotal decade. You are near enough to retirement to feel its hot breath on your neck, and that can be a good thing.

It sharpens your focus at a time when you may still have 10 or 15 years of work left, so there’s time to fatten your savings and watch the money grow. At this point, too, you may have been doing a job or honing a skill for long enough to feel a delicious sense of mastery and to be at the peak of your earning power.

These peak earning years coincide with a peak chance for savings. If children finally are on their own, household expenses are lighter than they have been in decades. Rather than spend this freed-up money, sock away savings and pay off debt, which will bring you closer to the retirement you hoped for.

Following are some critical financial moves to make in your 50s.

1. Map out your strategy

88studio / Shutterstock.com

Spend a weekend gathering your financial information — your savings, investments and other assets as well as your debts and bills. Then, map out your strategy for retirement.

Seeing all of the details of your finances and setting goals for your life beyond work will expose the gap, if any, between your plans and savings. It will also spur you to close that gap while you still can.

2. Meet with a fee-only financial planner

Rawpixel.com / Shutterstock.com

This is a good moment — while there’s still time for course corrections — to make sure you haven’t missed any crucial piece of planning. Even people who comfortably manage their own investments can profit from one or two meetings with a fee-only financial planner.

It’s important that the person you see charges an hourly fee with no commissions or products to sell, so they can objectively review your numbers, assumptions and plans. Stop by our Solutions Center to find a great financial adviser.

3. Use retirement calculators — with caution

Retirement Calculator
one photo / Shutterstock.com

By your 50s, you should have a realistic idea of what your income will be in retirement. Online retirement calculators are a good, if inexact, way to estimate the monthly or annual income you’ll receive from savings and other sources.

Calculators vary a great deal in their accuracy, but they can be useful for setting goals and exposing gaps between your likely income and expenses in retirement. The more detailed data a calculator collects, the more likely its results will be useful for you.

Two problems with calculators: They require you to make impossible guesses about the future rate of return on your investments, and sometimes they fail to accurately account for taxes.

Because of these issues, it’s a good idea to play around with several different calculators to see how your results can vary.

One respected calculator is ESPlannerBASIC, a free tool created by Laurence Kotlikoff, an economics professor at Boston University and the president of Economic Security Planning Inc.

Other calculators include:

4. Supercharge savings

Algonga / Shutterstock.com

If life’s demands have made it hard so far to save for retirement, your 50s offer a good chance to catch up. You’ll see if you are saving enough by following the first three steps:

  • Mapping your retirement
  • Assessing your situation
  • Estimating your retirement income

If you find there’s a gap between savings and your needs in retirement, the next step is to ramp up savings.

Shoot for saving 20% of your income. If that’s too big a change, choose a lower percentage to start with and then increase it over time. For example, if you can only set aside 10% of your income right now, start there and increase the percentage by 2% each year or 1% every few months.

5. Maximize retirement plan contributions

Man using laptop and calculator to plan finances
szefei / Shutterstock.com

If your employer matches a portion of your workplace retirement plan contributions, take full advantage of the free money — no matter your age. If your employer matches up to 3%, for example, save at least 3% to capture that gift.

Additionally, the Internal Revenue Service has special rules designed to encourage savers who are 50 or older to ramp up their savings for retirement. Here’s how to take advantage of these rules:

  • Max out your workplace retirement plan contribution: IRS rules let workers contribute up to $19,500 to workplace retirement plans like a 401(k) in both 2020 and 2021.
  • Max out your workplace retirement plan “catch-up” contribution: Savers age 50 and older may also contribute an additional $6,500 to such a plan in both 2020 and 2021. That’s $26,000 total.
  • Max out individual retirement account (IRA) contributions: The IRS rules for IRAs allow contributions of $6,000 in both 2020 and 2021, plus a catch-up contribution of $1,000 if you are 50 or older. That’s $7,000 total.

6. Decide whether to pay off your mortgage

igorstevanovic / Shutterstock.com

In an earlier era, workers tried to enter retirement with no debt at all. Paying off your mortgage before retirement still is a good goal, but it’s not possible for many people today.

Money Talks News founder Stacy Johnson says that putting money in a tax-deferred retirement account often offers a better return than putting that money toward paying down a mortgage faster. The reason, in short, is tax savings.

At the same time, you can’t discount the psychological value, at least for some people, of owning their home free and clear in retirement. For a closer look at the pros and cons, read: “Ask Stacy: Should I Save More for Retirement or Pay Down My Mortgage?

7. Pay off debt aggressively

marienalien / Shutterstock.com

Once you retire, interest payments on debt can eat up your limited income, making it difficult to pay off loan balances. Now, in your highest earning years, is the time to aggressively eliminate nonmortgage debt, from credit card balances to auto loans and other debts.

Don’t let pride stop you from getting help if you need it. You owe it to yourself and your family not to stick your head in the sand.

If loan payments are feeling unmanageable, you may benefit from taking out a consolidation loan to lower your interest rates and help you focus on a single payment. A trustworthy nonprofit credit-counseling agency can help you set goals, make a repayment plan and negotiate with your creditors if necessary. Stop by our Solutions Center to find help paying off your debts.

8. Keep a portion of savings invested in growth

Sergey Nivens / Shutterstock.com

Playing it safe is a natural inclination at this stage in life. You want to protect your hard-earned savings, but if your savings don’t at least keep up with inflation you’ll lose spending power.

The solution? Keep a good portion of your retirement savings invested in the stock market. Because retirement is a stage of life that can last 20 or 30 years, there’s time to recover if some of your investments lose value.

9. Bring both spouses on board

Iakov Filimonov / Shutterstock.com

If finances are the realm of just one spouse in your family, it’s time to correct that. Both members of a couple should understand their debts, savings, investments and plans so that the survivor can take over the financial reins if one should die or become disabled.

10. Consider dropping life insurance

Sisacorn / Shutterstock.com

One place to cut expenses could be your life insurance premiums. But drop life insurance only if, after careful consideration, you find that it no longer benefits your family. For example, you might not need coverage if your spouse and children will not need the protection because the children are grown and are financially independent, and your spouse will inherit a home and sufficient retirement savings.

If you are unsure what to do, get expert help from a fee-based financial planner (see step No. 2). Do not accept financial advice from an insurance representative or from anyone else who stands to gain from your decision or could sell you products.

For more, check out “7 Reasons You Don’t Need Life Insurance.”

11. Decide if you want long-term care coverage

Long term care on a laptop
Rawpixel.com / Shutterstock.com

If you are going to buy long-term care insurance, which helps pay costs should you become unable to care for yourself, your 50s are the years to do it. Wait much longer and premiums become prohibitively expensive. Also, you could develop health problems that could disqualify you for coverage.

Long-term care insurance can be expensive. However, it’s not always necessary. And if you still want it, timing can determine how costly your coverage will be. For more, read “This Is the Best Age to Buy Long-Term Care Insurance

12. Practice living on less

Alliance / Shutterstock.com

You’ll save more, and faster, by reducing spending. But there’s another reason to get a good grip on your outflow: Living on less gives you information about where your money goes and how much you truly will need in retirement. It’s a reality check for your planning.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
How to Save Up to 70% on 7 Everyday Purchases
How to Save Up to 70% on 7 Everyday Purchases

Stop getting sucked into paying a premium when good alternatives are available at huge savings.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

9 Genius Storage Solutions for Your Home
9 Genius Storage Solutions for Your Home

These creative products on Amazon will hide unsightly clutter while saving space.

5 Ways to Save up $500,000 in 15 Years
5 Ways to Save up $500,000 in 15 Years

Even if you’re behind in preparing for retirement, there’s still a way to pull together a solid nest egg if you focus.

The 5 Worst Home Upgrades for the Money
The 5 Worst Home Upgrades for the Money

These home improvement projects basically never pay off.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?
Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?

Understanding survivors benefits rules is the key to getting the most from your benefit.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

These Are the 10 Worst Cars for Depreciation
These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

Never Buy These 10 Things With Your Credit Card
Never Buy These 10 Things With Your Credit Card

Credit cards offer many conveniences and protections, but sometimes it’s simply smarter to keep the plastic tucked away.

13 Amazon Purchases That We Are Loving Right Now
13 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

5 Ways Social Security Will Change in 2021
5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

11 ‘Disposable’ Items You Should Be Reusing
8 Surprising Household Items You Can Sell for Fast Cash
8 Surprising Household Items You Can Sell for Fast Cash

Sometimes, the humblest household items are worth the most money.

8 Things You Should Buy at Restaurant Supply Stores
8 Things You Should Buy at Restaurant Supply Stores

You don’t have to be a chef or a restaurant owner to shop here.

Stop Buying These 19 Things Online
Stop Buying These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Cut These 11 Expenses Now If You Hope to Retire Early
Cut These 11 Expenses Now If You Hope to Retire Early

Like the idea of financial independence? Part of the FIRE equation is cutting costs.

7 Tips for Building an Emergency Food Supply
7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

5 Secrets of Seniors Who Keep Their Minds ‘Young’
5 Secrets of Seniors Who Keep Their Minds ‘Young’

Here is why some seniors’ brains work as well as those of people who are decades younger.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.