How to Catch Up and Build Security • Benzinga

Entering your 50s means retirement is no longer a distant dream but a tangible goal on the horizon. This decade is crucial for solidifying your financial foundation, maximizing your savings and positioning your assets for a smooth transition into your post-work life. Retirement planning in your 50s is the time to refine your game plan, ensuring your capital is preserved and your income streams are ready to flow.

Many people in their 50s make one of two mistakes with investing. Either they panic and become overly conservative, missing out on potential growth, or they continue with a growth-oriented strategy without adequately de-risking, leaving themselves vulnerable to market downturns just as they need their money.

The key here is balance. You need to maintain some growth while significantly reducing risk and leveraging every opportunity to boost your nest egg. Our guide will show you how.

Where You Likely Stand

It’s natural to be curious about how your financial state stacks up against others, especially people around your age or at a similar life stage. While income is often the go-to for these comparisons, looking at net worth can offer a more insightful picture of your overall financial health. 

The median net worth of people in their 50s is $190,038, while the average net worth is $1.3 million.

Just remember, average net worth can be misleading because it’s heavily influenced by extremely wealthy people. A more telling metric for most Americans is the median, which represents the midpoint and gives you a clearer picture of what’s typical. 

Suggested Asset Mix

As you approach retirement, your asset allocation should gradually shift from aggressive growth to capital preservation and income generation. This means reducing your exposure to stocks and increasing your allocation to bonds and cash equivalents. 

Keep in mind that these are general guidelines. Your risk tolerance, financial goals and time horizon should guide your investment decisions.

Priority Accounts: What to Open/Fund and in What Order

At this stage, maximizing contributions to tax-advantaged accounts is paramount, especially leveraging catch-up provisions.

1. 401(k) or Employer-Sponsored Plan: Contribute enough to get the full employer match. This is free money and an immediate return on your investment.

   Then, maximize your regular contribution. For 2025, the elective deferral limit is $23,500. Leverage catch-up contributions. If you are 50 or older, you can contribute an additional $7,500 to your 401(k) in 2025, bringing your total potential contribution to $31,000.

2. Health Savings Account (HSA) (if eligible): If you have a high-deductible health plan (HDHP), an HSA is a triple-tax-advantaged account: You get tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses.

   For 2025, the individual contribution limit is $4,300, and for families, it’s $8,550. If you’re 55 or older, you can contribute an additional $1,000 as a catch-up contribution. This is an excellent way to save for future healthcare costs in retirement, which can be substantial.

3. Traditional or Roth IRA: The 2025 contribution limit is $7,000 for a traditional or Roth IRA. If you’re 50 or older, you can contribute an additional $1,000 as a catch-up contribution, for a total of $8,000.

   If you expect to be in a lower tax bracket in retirement than you are now, a traditional IRA (pre-tax contributions, taxable withdrawals) might be beneficial. If you expect to be in a similar or higher tax bracket, a Roth IRA (after-tax contributions, tax-free withdrawals in retirement) could be better.

4. Taxable Brokerage Account: Once you’ve maxed out your tax-advantaged accounts, a brokerage account offers flexibility, as there are no contribution limits or withdrawal restrictions based on age. This can be a good place for investments you might need access to before retirement or for assets you plan to draw from after exhausting your tax-advantaged funds.

Mistakes People Make

Even the most disciplined savers and sharpest investors can stumble. Financial planning isn’t just about making smart moves; it’s also about sidestepping common mistakes that can derail even the best intentions. By recognizing these pitfalls, you can adjust your strategy to ensure your hard work and diligent saving continue to build toward the secure and comfortable retirement you envision.

• Forgetting Old 401(k)s: Don’t leave old 401(k)s scattered across previous employers. Consolidate them into your current 401(k) or roll them into an IRA for simpler management and potentially broader investment options.
• Not Maxing Employer Match: This is the easiest money you’ll ever make. Don’t leave it on the table.
• Being Too Conservative Too Early or Too Aggressive Too Late: Find the right balance for your risk tolerance and time horizon. A sudden market downturn just before retirement can be devastating if your portfolio is too heavily weighted in stocks. Conversely, being overly conservative too early can limit growth potential.
• Ignoring Healthcare Costs: These are often the biggest wildcard in retirement. Do not fail to underestimate healthcare costs, including the potential need for long-term care, which can quickly derail even the best-laid plans. You can plan for them through an HSA, a dedicated savings fund or long-term care insurance.
• Underestimating Longevity: People are living longer. Your retirement savings need to last for potentially 20, 30 or even 40 years.
• Failing to Create an Income Strategy: Accumulating wealth is one thing; turning it into a sustainable income stream is another. Don’t wait until retirement to figure out how you’ll draw down your assets.

Yearly To-Dos, Settings to Update, Goals to Hit

As retirement draws closer, there are specific actions and reviews that become more important. Think of these as your annual financial checklist designed to keep your retirement plans on track and your financial house in order. By spending time on this checklist each year, you can ensure your strategy is aligned with your long-term goals.

• Review and Adjust Asset Allocation: At least once a year, preferably with a financial advisor, review your portfolio’s asset allocation. As you get closer to retirement, incrementally shift toward a more conservative mix.
• Maximize Catch-Up Contributions: Make sure you are taking full advantage of the increased contribution limits for people over 50.
• Stress-Test Your Retirement Plan: Use online calculators or work with an adviser to run “what-if” scenarios. What if the market drops significantly? What if you live longer than expected? What if healthcare costs are higher? Monte Carlo simulations can be particularly helpful here, showing the probability of your plan’s success across thousands of potential market outcomes.
• Develop an Income Strategy: Start thinking about how you’ll generate income in retirement. This could involve a combination of Social Security, pension (if applicable), systematic withdrawals from investment accounts, annuities or part-time work.
• Consider Long-Term Care Insurance: As you enter your 50s, this is a prime time to explore long-term care insurance. Premiums are generally lower when you’re younger and healthier. Understand the benefits (daily/monthly maximums, benefit period), elimination periods, and inflation protection. This can protect your nest egg from potentially catastrophic care costs.
• Estimate Social Security Benefits: Create an account on ssa.gov to view your earnings history and estimate your future benefits at different claiming ages (full retirement age, early or delayed). This is a crucial component of your retirement income.
• Check Your Credit Score: Your credit score, which will fall between 300 and 850, is a key indicator for lenders and insurance companies in determining your creditworthiness. Regular monitoring is important to verify its accuracy.
• Assess Insurance Needs: Review life insurance, disability insurance and umbrella policies to ensure adequate coverage as your financial picture changes.
• Pay Down High-Interest Debt: Prioritize paying off credit card debt and other high-interest loans. Entering retirement debt-free (or close to it) significantly reduces financial stress.

Frequently Asked Questions