If you’re hoping to retire sometime within the next decade, 10 years may not feel so far away — but when it comes to finances, are you where you thought you’d be with your retirement savings?
Being in your 50s can come with a lot of extra baggage. Sure, you might make more money than you did in your 20s, and maybe you’ve paid off your student loan and put a major dent in your mortgage. But, as part of the sandwich generation, you may also be paying for your kids’ college tuitions while simultaneously taking care of your aging parents.
Add in rising interest rates and inflation, and your retirement goals may have had to take a back seat for more immediate priorities in recent years.
If you’re not on track to meet your retirement savings goals, it doesn’t mean the life you’d hoped to enjoy in your golden years is completely out of reach — you still have time to shore up your finances. Granted, you might not benefit as much from compounding, but there are other ways to ramp up your savings.
Here are three smart money moves to make right now.
1. Increase your retirement savings contributions
First off, if you have a 401(k), consider upping your contributions; if possible, try to take advantage of your full employer match.
Remember, even a small amount can add up over time. For example, if you’re 55 and earn $80,000 a year, a 1% annual increase could add up to an additional $16,779 by age 67, according to calculations by Fidelity Investments.
Of course, not everyone has a 401(k). If that’s the case, you still have options. You could contribute to an individual retirement account (IRA), which allows your money to grow tax-free. The annual contribution limit for an IRA is $7,000 for 2024, while those aged 50+ can take advantage of catch-up contributions — allowing you to contribute an extra $1,000.
2. Diversify your investment accounts
You probably won’t want to put all of your eggs in one basket. If you’re in your 50s, it’s not too late to start diversifying your investment accounts.
In fact, it could be an ideal time: you’re likely making more money than you did earlier in your career, yet you still have time to let your investments grow. You may want to consider investing in stocks, bonds, mutual funds, exchange-traded funds (ETFs) or real estate investment trusts (REITs) — especially if you’ve already maxed out your IRA.
Besides, you don’t necessarily want to rely entirely on tax-advantaged retirement accounts in your golden years. That’s because, every time you make a withdrawal, it will be taxed as ordinary income.
If you have money in a brokerage account, you won’t benefit from deductible contributions or tax-free growth, but you could be taxed at a lower capital gains rate. And you could potentially benefit from higher returns (though you’ll also take on higher risk).
Consider talking to a financial advisor about how diversification can help you meet your retirement goals.
3. Purchase long-term care insurance
Another consideration is long-term care insurance, which can help with the rising cost of health care in your golden years. While Medicare can certainly help with some medical expenses once you’re 65+, in most cases it won’t cover assisted living and at-home care. And those costs can add up quickly.
For example, are you prepared to fork over $64,200 per year for a private room in an assisted living facility? That’s the median price, according to Genworth’s 2023 Cost of Care survey.
It’s worth looking into long-term care insurance now, because the older you get, the higher your premiums will rise. If you wait another decade to purchase this insurance, you can expect to pay much higher premiums.
