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Retirement Checklist for Your 50s

Your 50s are 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 qualified employer sponsored retirement plan (QRP), such as 401(K), 403(b), or governmental 457(b).

    • You are now able to make “catch-up” contributions. A QRP catch-up contribution is an elective deferral made by a participant age 50 or older that exceeds a statutory limit, a plan-imposed limit, or the actual deferral percentage test limit for highly compensated employees. Learn more about 401(k) plan catch up contribution eligibility by visiting the IRS website.
    • You can contribute an additional $1,000, above the annual maximum amount to your IRA.
  • Find out how long your savings will last with My Retirement Plan®, an easy-to-use online calculator.

  • Don’t assume that IRA contributions are enough.

    • Depending on your retirement goals, you might need to be saving more of your income while in your 50s.
    • QRP 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 distributions, even if you change jobs.

    • Be aware that taking a distribution from your retirement accounts before age 55 or 59½ (depending on the type of account and when you leave your employer) can carry not only high taxes, but also a 10% additional tax on early distributions, meaning those taken before you are age 55 or 59½, that are included in gross income.
  • 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.
  • Evaluate options for retirement assets left at former employer's QRP. These assets may provide a substantial part of your income in retirement. Whether you’re starting a new job, have been displaced, or are retiring, you should learn the options for these assets. Each of the following options is different and may have distinct advantages and disadvantages.

    You generally have four options for your QRP distribution:

    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. Take a lump sum distribution and pay the associated taxes

    When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when distributions are no longer subject to the 10% additional tax, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.

3. Protect yourself from the unexpected

4. Develop your income plan

In your 50s, you can be more realistic about when you want to retire, how much income you’ll need, and what your current retirement savings are projected to be once you reach retirement age. Visit income in retirement to learn about the steps to developing 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?
  • Learn how to create your retirement income using a withdrawal strategy that's right for you.

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.

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