How to Ramp Up Retirement Planning in Your 50s

By Taylor Gordon

The golden years are drawing closer. You probably feel a twinge of anxiety about your retirement fund. Will your savings be enough to live on for over 20 years? Should you put off retirement to save even more money?

Take Ann Cooper for example. She’s a 56 year old Baby Boomer. Her generous salary combined with her husband’s allowed them to put their daughter through college without taking any loans. The Coopers have also saved a decent amount of money in their nest egg, yet they still face retirement concerns.

Especially now that Ann has been laid off from her job of 15 years, which put a hiccup in the Cooper’s retirement plan. Ann’s considering a career change to postpone retirement as the couple is not ready to start living on just one salary yet. She probably won’t earn the same salary at her next job, but at least the Coopers won’t have to tap into their savings as long as Ann continues to work in some capacity.

At this life stage, the Coopers have already started to turn the page on many financial responsibilities — like sending their daughter to college. Still, they want to save aggressively to buy themselves the best retirement they can afford at this point.

Preparing for Retirement in Your 50’s

Ann’s situation mirrors what many other Baby Boomers are facing.

Working into retirement has become a trend. According to a survey by Transamerica, the total estimated median household retirement savings for people in their 50’s is $117,000. And 59% of workers in their 50’s plan to continue working past 65.

Another report by the United States Government Accountability Office or GAO states about half of the households they surveyed age 55 and older have no retirement savings at all.

There’s no doubt, these stats paint a bleak picture. But, even if you’re behind schedule (or you experience an unexpected job hiccup like Ann) there’s an opportunity to bounce back. You can take advantage of retirement perks available to the workers who are 50 years or older -- like catch-up contributions -- which can help boost your savings.

How to Get on The Right Path for Retirement in Your 50's

1. Check How Your Retirement Savings Are Tracking

Know where you are now at Point A, to figure out what you need to do to arrive at Point B. Use a retirement calculator to see how much more you need to save in the next 15 years to reach your savings goal. You can also use the free retirement planning tools at aboutLife to find your path to retirement.

2. Consolidate Your Retirement Accounts

At this stage in your career, you’ve likely worked for many employers and accumulated savings in several retirement accounts. It’s time to consolidate your savings as well, for a few reasons.

  • It’s easier to track overall investment performance when all your money (or most of it) in one place
  • Consolidating your accounts may help you save money in fees
  • Receiving retirement checks from one account is more convenient

If you have 401(k) accounts sitting with past employers, you may be able to roll them over to an account with your current employer. You can also consolidate your past 401(k) accounts into a Traditional IRA or ROTH IRA. Call your 401(k) provider or speak with an advisor to decide which option will benefit you the most.

3. Increase Your Savings With Catch-Up Contributions

Are you taking advantage of catch-up contributions? If not, you’re leaving money on the table. People closer to retirement age are given an increased contribution limit for an IRA, 401(k) and other investment accounts.

Shockingly, only 65% of workers in their 50’s and 68% of workers 60 and older are aware of catch-up contributions, according to Transamerica. Don’t fall into this category. For IRAs, you can add an extra $1,000 to your contributions. You can contribute an extra $6,000 to your 401(k) and the good news doesn’t stop there. Your employer may match your contributions at a higher percentage as well once you turn 50. Remember that any employer match is free money going straight into your retirement!

Reach out to your benefits department to see what extra perks you qualify for. Since many experience an income peak in their 50’s, it’s the perfect time to take advantage of increased contributions. Put salary increases and any other bonuses you receive in your retirement fund.

4. Refinance Your Mortgage for a Lower Rate

If you haven’t refinanced your mortgage, now’s the time to do it. Mortgage rates are at a low and can increase at any time. Lock into a low rate while you can if you can afford the closing costs. Make sure the benefit of low-interest outweighs the cost of refinancing. Do a calculation to find out how long the amount you save in interest will break-even with the cost of the refinance.

5. Consider Putting Money into a Health Savings Account (HSA)

An HSA or Health Savings Account can be your best friend as you head into retirement. The HSA is an account similar to a 401(k), but it’s for health expenses specifically. Most of us will experience medical bills throughout retirement, so it’s an ideal way to grow you money like any other investment. The account is tax-free on the front and backend (if you follow the rules) as well as tax-deductible. Some employers will even match your HSA contributions like a 401(k). One caveat is you must couple your HSA with a high-deductible health plan.

6. Check Your Investment Allocations

Are you making the right investment allocations for your age and retirement goals? When was the last time you rebalanced your accounts? You can’t set and forget your investments. As you age, your risk profile changes. You need to control your allocations to make the most return, but you may also need to dial back on risk because you’re nearing retirement age. If you’re not sure how to manage your allocations speak with an advisor about your portfolio but make sure you choose a fee-only advisor (instead of commission-based) that will put your best interests forward.

7. Check Your Insurance Protections & Get Life Insurance

Check your policies regularly to make sure your rates are competitive and you have the right coverage. Review each one including your health insurance, homeowner’s or renters, auto and umbrella insurance.

We all like to avoid talking about mortality, but you need to think about life insurance. If you pass on unexpectedly, do you have enough saved to provide for your family financially? If not, it’s something you must consider. Check with your HR department to learn what types of insurance are available to you at your workplace and you may be able to get them at a steep discount.

8. Review Your Social Security Options

Check your Full Retirement Age and plan to delay receiving your Social Security benefits until this age (or past it) to get as much money as you can. Your benefits increase 8% each year that you delay collecting Social Security. Of course, you can take Social Security benefits as early as 62, but say your full retirement age is 67. If you still claim Social Security at 62, you’ll earn 30% less in Social Security.

9. Think About Your Retirement Transition

Your dream for now may be to go off into retirement and never think about working again. But, a few months into it you may get antsy and feel compelled to find something to do or work for more income. It only took a few weeks for my father who retired from the U.S. Air Force to get the, "I need to work," itch.

Start thinking about what you want to do now to smoothly transition into retirement. You may want to consider a small, part-time job. Speak with your current employer to see if they offer a phased retirement plan where your hours slowly decrease until you’re ready to stop working. You can even create a low-stress side business you’re passionate about to supplement your retirement income and occupy your downtime.

Kick Your Retirement Plan into High Gear

Everyone’s path to retirement is different. Don’t feel discouraged if you’re behind in your savings. You still have time to design the retirement you want, but you need to put a plan in motion - now.

Take our retiree Ann. She jumped into action as soon as she got the pink slip. She doesn’t feel close to retirement age. She doesn’t look close to retirement age. And she has the spirit of someone half her age.

Sure, her previous retirement plan has derailed, but she’s looking forward to the opportunity to explore a different path while adding money into her nest egg. Like Ann, you have options to pump up your savings and make the most of your retirement. Use aboutLife's Retirement Planning Tools to design the retirement you want.