Planning Retirement In Your 50s: The Sprint
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investment
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July 31, 2025
07:35 PM
Benzinga
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Entering your 50s means retirement is no longer a distant dream but a tangible goal on the horizon
This decade is crucial for solidifying your financial foundation, maximizing your savings and positioning your assets for a smooth transition into your post-work life
Retirement planning in your 50s is the time to refine your game plan, ensuring your capital is preserved and your income s are ready to flow.Many people in their 50s make one of two mistakes with
Either they panic and become overly conservative, missing out on potential growth, or they continue with a growth-oriented strategy without adequately de-risking, leaving themselves vulnerable to market downturns just as they need their money.The key here is balance
You need to maintain some growth while significantly reducing risk and leveraging every opportunity to boost your nest egg
Our guide will show you how
Table of ContentsWhere You ly StandSuggested Asset MixPriority Accounts: What to Open/Fund and in What OrderSee All 6 ItemsWhere You ly StandIt’s natural to be curious how your financial state stacks up against others, especially people around your age or at a similar life stage
While income is often the go-to for these comparisons, looking at net worth can offer a more insightful picture of your overall financial health
The median net worth of people in their 50s is $190,038, while the average net worth is $1.3 million.Just remember, average net worth can be misleading because it’s heavily influenced by extremely wealthy people
A more telling metric for most Americans is the median, which represents the midpoint and gives you a er picture of what’s typical
Suggested Asset MixAs you apach retirement, your asset allocation should gradually shift from aggressive growth to capital preservation and income generation
This means reducing your exposure to stocks and increasing your allocation to bonds and cash equivalents
Asset ClassStocks65-85%Bonds15-35%Cash/Cash Equivalents0-5% Keep in mind that these are general guidelines
Your risk tolerance, financial goals and time horizon should guide your investment decisions.Priority Accounts: What to Open/Fund and in What OrderAt this stage, maximizing contributions to tax-advantaged accounts is paramount, especially leveraging catch-up visions.401(k) or Employer-Sponsored Plan: Contribute enough to get the full employer match
This is free money and an immediate return on your investment.Then, maximize your regular contribution
For 2025, the elective deferral limit is $23,500
Leverage catch-up contributions
If you are 50 or older, you can contribute an additional $7,500 to your 401(k) in 2025, bringing your total potential contribution to $31,000.Health Savings Account (HSA) (if eligible): If you have a high-deductible health plan (HDHP), an HSA is a triple-tax-advantaged account: You get tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses.For 2025, the individual contribution limit is $4,300, and for families, it's $8,550
If you're 55 or older, you can contribute an additional $1,000 as a catch-up contribution
This is an excellent way to for future healthcare costs in retirement, which can be substantial.Traditional or Roth IRA: The 2025 contribution limit is $7,000 for a traditional or Roth IRA
If you're 50 or older, you can contribute an additional $1,000 as a catch-up contribution, for a total of $8,000.If you expect to be in a lower tax bracket in retirement than you are now, a traditional IRA (pre-tax contributions, taxable withdrawals) might be beneficial
If you expect to be in a similar or higher tax bracket, a Roth IRA (after-tax contributions, tax-free withdrawals in retirement) could be better.Taxable Brokerage Account: Once you've maxed out your tax-advantaged accounts, a brokerage account offers flexibility, as there are no contribution limits or withdrawal restrictions based on age
This can be a good place for investments you might need access to before retirement or for assets you plan to draw from after exhausting your tax-advantaged funds.Mistakes People MakeEven the most disciplined rs and sharpest investors can stumble
Financial planning isn’t just making smart moves; it’s also sidestepping common mistakes that can derail even the best intentions
By recognizing these pitfalls, you can adjust your strategy to ensure your hard work and diligent saving continue to build toward the secure and comfortable retirement you envision.Forgetting Old 401(k)s: Don't leave old 401(k)s scattered across previous employers
Consolidate them into your current 401(k) or roll them into an IRA for simpler management and potentially broader investment options.Not Maxing Employer Match: This is the easiest money you'll ever make
Don't leave it on the table.Being Too Conservative Too Early or Too Aggressive Too Late: Find the right balance for your risk tolerance and time horizon
A sudden market downturn just before retirement can be devastating if your portfolio is too heavily weighted in stocks
Conversely, being overly conservative too early can limit growth potential.Ignoring Healthcare Costs: These are often the biggest wildcard in retirement
Do not fail to underestimate healthcare costs, including the potential need for long-term care, which can quickly derail even the best-laid plans
You can plan for them through an HSA, a dedicated savings fund or long-term care insurance.Underestimating Longevity: People are living longer
Your retirement savings need to last for potentially 20, 30 or even 40 years.Failing to Create an Income Strategy: Accumulating wealth is one thing; turning it into a sustainable income is another
Don't wait until retirement to figure out how you'll draw down your assets.Yearly To-Dos, Settings to , Goals to HitAs retirement draws closer, there are specific actions and reviews that become more important
Think of these as your annual financial checklist designed to keep your retirement plans on track and your financial house in order
By spending time on this checklist each year, you can ensure your strategy is aligned with your long-term goals.Review and Adjust Asset Allocation: At least once a year, preferably with a financial advisor, review your portfolio's asset allocation
As you get closer to retirement, incrementally shift toward a more conservative mix.Maximize Catch-Up Contributions: Make sure you are taking full advantage of the increased contribution limits for people over 50.Stress-Test Your Retirement Plan: Use online calculators or work with an adviser to run "what-if" scenarios
What if the market drops significantly? What if you longer than expected? What if healthcare costs are higher? Monte Carlo simulations can be particularly helpful here, showing the bability of your plan's success across thousands of potential market outcomes.Develop an Income Strategy: Start thinking how you'll generate income in retirement
This could involve a combination of Social Security, pension (if applicable), systematic withdrawals from investment accounts, annuities or part-time work.Consider Long-Term Care Insurance: As you enter your 50s, this is a prime time to explore long-term care insurance
Premiums are generally lower when you're younger and healthier
Understand the benefits (daily/monthly maximums, benefit period), elimination periods, and inflation tection
This can tect your nest egg from potentially catastrophic care costs.Estimate Social Security Benefits: Create an account on ssa.gov to view your earnings history and estimate your future benefits at different claiming ages (full retirement age, early or delayed)
This is a crucial component of your retirement income.Check Your Credit Score: Your credit score, which will fall between 300 and 850, is a key indicator for lenders and insurance companies in determining your creditworthiness
Regular monitoring is important to verify its accuracy.Assess Insurance Needs: Review life insurance, disability insurance and umbrella policies to ensure adequate coverage as your financial picture changes.Pay Down High-Interest Debt: Prioritize paying off credit card debt and other high-interest loans
Entering retirement debt-free (or close to it) significantly reduces financial stress.Frequently Asked QuestionsQHow do I know whether I'm on track for retirement in my 50s, given the wide range of average net worth figures? ADon’t just compare your net worth to the average; the median net worth of around $190,038 for people in their 50s offers a er picture
The best apach is to ject your future expenses and income s, then stress-test your plan with “what-if” scenarios to ensure it’s robust enough for a long and comfortable retirement
QShould I prioritize paying off my mortgage or maximizing my retirement contributions in my 50s? AAlways pay off high-interest debt first
After that, prioritize maximizing your employer’s 401(k) match
For your mortgage, consider the interest rate versus potential investment returns; while mathematically might win, the peace of mind of being debt-free in retirement is a significant benefit for many
QI'm in my 50s and ly at my peak earning years
Should I prioritize a Traditional IRA/401(k) for the immediate tax deduction or a Roth IRA/401(k) for tax-free withdrawals in retirement? AYour choice between Traditional and Roth depends on whether you expect to be in a lower tax bracket now (Traditional) or in retirement (Roth)
Traditional offers an immediate tax deduction, while Roth vides tax-free withdrawals in the future
Consider diversifying between both for tax flexibility, and don’t forget to leverage the catch-up contributions available in your 50s.
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