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Saving for Retirement in Your 50s

In your 50s, your earning power may be at its highest

Maximize your retirement savings

When you're in your 50s, you may be starting to look forward to what retirement might hold. Make the most of these years to map out your future.

Increase your savings

To help you make the most of the time you have before you retire, here are some tips to consider.

  • Check your savings status. If your savings is not where you'd like it to be, you still have time to get closer to the retirement you want. Use our Retirement Quick View Calculator to see if you are on track.
  • Take advantage of "catch-up" contributions. If you're already saving up to the regular IRS maximum, consider making "catch-up" contributions to both your retirement plan and IRAs.
  • Avoid taking early distributions. Be aware that withdrawing cash from your retirement accounts before age 55 or 59 ½ (depending on the plan) can carry high taxes and early withdrawal penalties.
  • Contribute financial windfalls. Setting aside financial windfalls such as bonuses, raises, and tax refunds can help accelerate your savings.
  • Maintain your emergency fund. Most experts agree that you should keep 3 – 6 months of your living expenses set aside in an easy-to-access account such as a checking or savings account. If you haven't already, consider an emergency fund in case something unexpected arises.

Review and update your retirement plan

Are you on track to reach your retirement goals? Consider reviewing and updating your retirement plan and assure your asset allocation is still in line with your risk tolerance.

  • Review your asset allocation. Ensure your investment and asset allocation strategy is aligned with your goals.
  • Consolidate. Consider consolidating your accounts from previous employers’ retirement plans into your current employer's retirement plan or an IRA to help you better manage your finances. View your distribution options.

Protect yourself from the unexpected

Insurance can become a valuable income and estate planning tool as you approach retirement, and it will likely cost less to buy in your 50s than in your 60s.

  • Review your insurance policies. Consider additional life insurance protection to provide for loved ones.
  • Consider insurance. Learn about long-term care insurance which can help meet expenses that could deplete your estate in the case of extended illness.
  • Protect your home. You may want to make sure your home is sufficiently covered by homeowner’s insurance.
  • Protect yourself and your loved ones. Consider checking that your will and other documents are up to date and that your beneficiaries are listed where applicable.

Develop your income plan

In your 50s, you may be able to 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.

  • Identify income sources. If you are 5 – 10 years from retirement, consider creating a plan to help you generate a reliable income stream from your accumulated savings and other sources.
  • Assess monthly expenses. Think about what your monthly expenses (PDF) may be in retirement.
  • Understand risks. Do you know how longevity can impact your plan? Consider how health care or inflation may impact your portfolio.
  • Consider annuities. Understand the role that guaranteed income with annuities could play in helping you meet essential expenses in retirement.

To help you start your income planning, explore an informative and interactive tool, Your Income Story. It can assist you in creating a profile of your retirement needs and goals. Consider speaking with a financial advisor to help you work toward an income plan.

"Catch-up" contributions

For 401(k)s (not including SIMPLE plans), the catch-up amount for 2016 is $6,000 above the contribution limits and adjusted for inflation in subsequent years. This brings the 2016 maximum 401(k) contribution limit to $24,000 if you're over 50.

For Traditional and Roth IRAs, the catch-up amount is $1,000 above the standard limits, which are now annually adjusted for inflation.