Rawpixel Ltd / Getty Images/iStockphoto
Common advice says that it’s important to start planning for retirement as soon as possible. While you may have opened a retirement savings account in your 20s or 30s, it doesn’t mean your plan should be on autopilot until the day you leave work for good. There are important steps to take in your 50s, too, to ensure you’re on track for your golden years.
Retirement at Any Age: Get Top Retirement Tips for Every Stage of Life
Find Out: 7 Surprisingly Easy Ways To Reach Your Retirement Goals
Prioritize Your Retirement
As you get closer to retirement age, it’s important to prioritize a comfortable retirement above other financial goals. This often means spending less in other areas.
For example, one of the largest expenses for people in their 50s is their children’s college education, according to Julia Vanzler, managing director, senior wealth advisor Wealth Management & Trust at SVB Private. “It is a wonderful gift to be able to help pay for college, but it’s important to remember that students can borrow money for school, there are no loans for retirement,” she said. Save for retirement first, then determine if there are excess savings that can go toward other things, such as college expenses.
Here’s some more information about saving for retirement and preparing for the costs that come with it:
People ages 50 and older have the opportunity to save more in their employer savings plan and possibly make up for lost time, said John Campbell, east region head of wealth planning for U.S. Bank. For example, the contribution limit for a 401(k) in 2022 is $20,500, but workers ages 50 and up can add an additional $6,500 for a total of $27,000 each year. If you have an IRA, you can make a catch-up contribution of $1,000 on top of the $6,000 annual limit.
See: Take These 7 Key Steps Today to Retire a Millionaire
Further, Campbell said it’s important to take advantage of your company match. “This has two benefits: You’re saving more for retirement and you’re reducing your taxable income.” An employer match is free money that can help bridge the gap between what you’ve saved and what you need to retire, so be sure to contribute at least enough to get the full match.
Here’s some more investing information:
Put Your Savings To Work
Vanzler said that for many workers, their peak earning years are in their 50s. That can present a great opportunity to increase savings. “Be cognizant of what you are spending on fixed vs. …….