Let’s face it – hitting the big 5-0 isn’t just about fighting those new gray hairs or wondering how your favorite bands from high school are now considered “classic rock.” It’s also the perfect time to take a hard look at your financial situation and make sure you’re on track for retirement.
As someone who’s been obsessed with personal finance for years, I’ve seen too many friends reach their 50s with that deer-in-headlights look when discussing retirement plans. Whether you were rocking out to Van Halen and Bon Jovi in your teenage years (like the AARP article mentions) or had different musical tastes, your 50s are a financial turning point.
So where exactly should you be financially at 50? Let’s break it down.
The 6-8X Rule: How Much You Should Have Saved
According to financial experts, by age 50 you should have saved approximately six to eight times your current annual income. So if you’re making $80000 a year, your retirement accounts should hold between $480,000 and $640,000.
But don’t panic if you’re not there yet! This is just a guideline, and your personal situation might differ, especially if you:
- Will receive a traditional pension
- Plan to significantly downsize in retirement
- Have other substantial assets
- Expect an inheritance
The important thing is to know where you stand. As Mari Adam, a certified financial planner in Boca Raton, Florida, puts it: “This is a dress rehearsal for retirement.”
8 Financial Moves You Must Make in Your 50s
1. Calculate Your Net Worth
Many people, even those with financial advisors, don’t actually know their net worth. This figure is crucial to determining how prepared you are for retirement.
How to calculate it
- Add up all your assets (savings, investments, home equity, etc.)
- Subtract all your debts (mortgage, car loans, credit cards, etc.)
- The result is your net worth
Create a simple spreadsheet to track this number every quarter, Watching it grow can be incredibly motivating!
2. Max Out Your Retirement Accounts
Your 50s are the perfect time to take advantage of “catch-up contributions” designed specifically for older workers:
- For 401(k) plans (2025): Standard contribution of $23,500 plus an additional $7,500 catch-up contribution for those 50+, allowing a total of $31,000
- For IRAs (2025): Standard contribution of $7,000 plus an additional $1,000 catch-up contribution for those 50+, allowing a total of $8,000
- For those aged 60-63: An even higher catch-up cap allows for an additional $11,250 in workplace plans, totaling $34,750
If you can’t max out everything, at least contribute enough to get your employer match – that’s free money!
3. Open a Health Savings Account (HSA)
HSAs offer a triple tax advantage that’s hard to beat:
- Contributions are pre-tax
- Growth is tax-free
- Withdrawals for qualified medical expenses are tax-free
To qualify in 2025, your health insurance plan must have a deductible of at least $1,650 for individuals or $3,300 for families.
Contribution limits for 2025:
- $4,300 for self-only coverage
- $8,550 for family coverage
- Additional $1,000 catch-up contribution if you’re 55+
The best part? After age 65, you can withdraw HSA funds for non-medical expenses without penalty (though you’ll pay income tax on those withdrawals).
4. Tackle Your Debt Strategically
Not all debt is created equal. Focus on eliminating high-interest debt like credit cards first.
As Bill Shafransky from Moneco Advisors points out, if you’re paying 26.99% interest on credit card debt but only earning 7% on investments, “you’re effectively 19.99% worse off by saving into your investment account than you are paying off the debt.”
However, if you have a low-interest mortgage (like those sweet 3% rates from a few years back), you might be better off investing extra money rather than making additional mortgage payments.
5. Plan for Tax Efficiency
If most of your retirement savings is in traditional 401(k)s and IRAs, you could face a tax time bomb when Required Minimum Distributions (RMDs) kick in at age 73.
Consider diversifying your tax exposure by:
- Contributing to a Roth 401(k) if your employer offers one
- Opening a taxable brokerage account
- Converting some traditional IRA funds to a Roth IRA during lower-income years
Christopher Haigh, a certified financial planner, warns that “some people get bumped up to a higher tax bracket because of RMDs.” Planning now can help avoid this situation.
6. Address Long-Term Care Needs
This is something too many people push off, but your 50s are the perfect time to plan for potential long-term care needs.
The stats are sobering: Nearly 70% of 65-year-olds will need some form of long-term care, and about 1 in 5 will need it for more than five years.
With the median annual cost of a semi-private nursing home room exceeding $111,000 in 2024, even a few months of care can devastate your savings.
Options to consider:
- Traditional long-term care insurance
- Hybrid policies combining life insurance with long-term care benefits
- Self-funding (setting aside enough to cover 2-3 years of care)
Whatever you choose, don’t wait. Premiums increase dramatically as you age, and health issues might make you uninsurable.
7. Evaluate Your Housing Situation
Where and how you’ll live in retirement can dramatically impact your financial needs. A shocking statistic: only 10% of homes nationwide are prepared for older adults’ needs, and just 40% have basic aging-ready features.
Ask yourself:
- Is my current home suitable for aging in place?
- Would modifications be feasible and cost-effective?
- Should I consider downsizing or relocating to a lower-cost area?
- What housing options exist in communities I’m considering for retirement?
As Carolyn McClanahan, a financial planner and physician, notes: “Thinking this through when you’re still healthy can save you a ton of money and angst down the road.”
8. Get Your Estate Plan in Order
Your 50s are the perfect time to create or update your estate plan. This isn’t just about a will – it’s about protecting yourself during your lifetime.
Essential documents include:
- Financial power of attorney
- Healthcare power of attorney
- Living will/advance directive
- Last will and testament
- Possibly trusts, depending on your situation
As Mari Adam emphasizes, “Your will is for what happens when you die. I’m most concerned about what happens while you live.”
What If You’re Behind?
If reading this article has you sweating because you’re nowhere near these financial milestones, take a deep breath. You’re not alone, and it’s not too late to improve your situation.
Here are some strategies if you’re playing catch-up:
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Work a few years longer – Even delaying retirement by 2-3 years can substantially increase your financial security by:
- Allowing more time for savings to compound
- Reducing the number of years your nest egg needs to last
- Potentially increasing your Social Security benefits
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Create a Social Security strategy – Create an online account at www.ssa.gov/myaccount to see your estimated benefits. Remember that delaying benefits until age 70 can significantly increase your monthly payment.
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Consider a phased retirement – Rather than going from full-time work to full retirement, consider working part-time for a few years to ease the transition financially.
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Ruthlessly cut expenses – Look for areas where you can reduce spending now to boost savings.
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Explore additional income sources – Side hustles, rental income, or monetizing hobbies can all help supplement your retirement savings.
The Bottom Line
Your 50s represent a critical financial decade where the decisions you make can dramatically impact your retirement quality. As Mari Adam puts it, “It’s the most important decade to do things right and avoid major pitfalls.”
The good news is that your 50s also typically represent your peak earning years, giving you a valuable opportunity to supercharge your savings and prepare for the next chapter of your life.
Remember, financial security isn’t just about hitting specific numbers – it’s about creating a plan that aligns with your personal goals and values. The most important thing is to be intentional and proactive rather than letting these crucial years slip by without taking action.
So take a good look at where you stand financially, make adjustments where needed, and set yourself up for the retirement you deserve. Your future self will thank you!
Pay down debt
High-interest debt, such as credit card debt, can be a major drag on your retirement income. If you’re paying 26.99 percent interest on a credit card balance but only earning an investment return of 7 percent, “you’re effectively 19.99 percent worse off by saving into your investment account than you are paying off the debt,” Shafransky says.
However, not all debts are alike. If you locked in a 30-year, fixed-rate mortgage when rates were 3 percent or lower, you’ll probably come out ahead by investing money instead of paying off your mortgage early, Shafransky says.
Contribute to a health savings account
A health savings account offers a triple tax advantage: Contributions are pretax, earnings grow tax-free, and withdrawals are tax-free as long as they’re used for eligible medical expenses. Eligible HSA expenses include co-payments, deductibles, over-the-counter medications such as cough medicine and pain relievers, hearing aids, contact lenses and dentures.
While you can use the money to pay for current out-of-pocket medical costs, you can also use it to set aside funds for medical expenses in retirement, says Bill Shafransky, a senior wealth adviser with Moneco Advisors in New Canaan, Connecticut. Once you turn 65, you can make withdrawals for nonmedical expenses without paying a 20 percent penalty, although you’ll have to pay taxes on the distribution.
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“For some people, that could be a saving grace,” Shafransky says.
To qualify for an HSA in 2025, your health insurance plan must have an annual deductible of at least $1,650 for individual coverage or $3,300 for family coverage. In 2025, workers enrolled in such a plan can contribute up to $4,300 for self-only coverage or $8,550 for family coverage, plus catch-up contributions of $1,000 if you’re 55 or older. Members only
Can I Catch Up On Retirement At 50?
FAQ
How much money should you have at 50 years old?
By age 50, you’ll want to have around six times your salary saved.
Can I retire at 50 with $500,000?
You can retire at 50 with $500,000; however, it will require careful planning and budgeting. As the table above shows, if you have an annual income of either $20,000 or $30,000, you can expect your $500,000 to last for over 30 years. This means you will run out of retirement savings in your 80s.
What is the best investment for a 50 year old?
Stocks for growth potential: Equities remain essential. They offer the potential to outpace inflation and support long-term goals. Consider maintaining a meaningful allocation to stocks—especially if retirement is still 10+ years away. Bonds for stability: Fixed income investments can help provide steady income.
At what age should you have $100,000 saved?