Your 50s is a time when your earning power and ability to save are typically the highest. Make the most of this opportunity. Here are some tips to consider.
1. Save more
“Catch up” by contributing more to your IRA and 401(k).
- You are now allowed extra “catch-up” contributions to both IRAs and 401(k)s.
- Set up a recurring transfer to your IRA, or increase the amount you’re already auto-transferring.
Find out how long your savings will last with My Retirement Plan®, an easy-to-use online calculator.
Don’t assume that IRA or 401(k) contributions are enough.
- Depending on your retirement goals, you might need to be saving more than 20% of your income while in your 50s.
- 401(k) and IRA contribution limits could mean you need to save extra in taxable accounts like a brokerage account.
Do your best to avoid taking early cash distributions, even if you change jobs.
- Be aware that withdrawing cash from your retirement accounts before age 55 or 59 1/2 (depending on the type of account and when you leave your employer) can carry not only high taxes, but also early withdrawal penalties.
Consider adding bonuses, tax refunds, or other lump-sum payments to your retirement savings.
Maintain your emergency fund of three to six months' income.
2. Review and update your retirement plan
- Are you on track to reach your retirement goals? Make sure you know how much you need to save to preserve your lifestyle in retirement.
- Ensure your investment and asset allocation strategy is aligned with your goals.
- Consider consolidating your tax-deferred investments from previous employers' retirement plans into one IRA to help you better manage your finances.
Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options are different and may have distinct advantages and disadvantages.
1. Roll assets to an IRA
2. Leave assets in your former employer's plan, if plan allows
3. Move assets to your new/existing employer's plan, if plan allows
4. Cash out or take a lump sum distribution
3. Protect yourself from the unexpected
- Consider additional life insurance protection to provide for loved ones.
- Learn about long-term care insurance.
- Protect what might be your most important retirement asset – your home. Make sure your home is sufficiently covered with homeowner’s insurance.
4. Develop your income plan
Identify your sources of income for retirement.
Assess what your monthly expenses will be.
Understand the risks. For example:
- Do you know how longevity can impact your plan?
- Have you planned for your healthcare needs in retirement?
- How will inflation impact your portfolio?
Create your retirement income; learn how to create a withdrawal strategy that’s right for you.
Use our tool and find out if an annuity might be a good fit for providing guaranteed income in your retirement.
We are here to help you take the steps that are right for you to and through retirement. To get started, contact a Wells Fargo Retirement Professional today.