Personal Finance
7 Smart Money Moves to Make In Your 50s
With retirement approaching, this is the time to optimize savings, minimize taxes, and ensure your financial future is on track. Here's how.
Reaching your 50s may be a financial milestone for many.
At this point in your life, you may have been able to pay off any high-interest debt and student loans. If you have kids, they may be heading to college or beginning their careers.
With some extra money freed up, it may be time to start more seriously planning for retirement and looking for other ways to put your money to work.
This list of financial moves to make in your 50s could help serve as a starting point, as you continue to plan for your golden years.
7 Smart Money Moves to Make In Your 50s
1. Start finalizing your retirement plan.
Have you considered the order you'll withdraw your retirement income?
Do you know at what age you should begin taking Social Security to maximize your benefit?
Have you considered how your retirement accounts could impact your taxable income as you age?
Have you properly prepared for future health expenses?
These are all questions you may want to begin addressing in your 50s as your investments continue to grow.
Consulting a fiduciary financial advisor can be a great first step to factoring all these questions into your retirement plan.
A Delta Wealth Advisors study indicates that between $100,000 - $500,000 in liquid assets is the level at which an advisor’s benefits potentially outweigh the potential costs.¹
Click here to take SmartAsset’s quick retirement quiz and get matched with vetted advisors in just a few minutes. The fiduciary financial advisors you match with are legally bound to work in your best interest.
2. Check in on (and keep building) your emergency fund.
Regardless of age or income level, it can be important to have, and continue to build, an emergency fund.
Emergency funds are typically measured by the number of months’ worth of expenses they can cover. Exactly how much someone may need in an emergency can depend on a variety of factors, but especially the stability of your income and expenses.
If you’re not happy with the amount in your emergency fund, or possibly don’t have anything set aside in emergency savings, you could consider starting by putting $1,000 in a high-yield savings account.
A high-yield account is a form of savings account that may pay higher interest rates than a standard-yield savings account. The difference can sometimes be significant, so it may be important to shop around and check rates before making a decision on which to open.
Click here to find High Yield Savings accounts that might fit your needs.
3. Consider refinancing your home.
Refinancing a mortgage means taking out a new loan to pay off the old one. When refinancing, the idea is to aim for a lower interest rate and better terms to potentially save money.
However, there are many factors to consider when refinancing a mortgage. You’ll want to understand how a shorter or longer term may impact your payments on interest vs. principle over time, as well as potential fees.
It’s important to learn the basics of how a refinance works before pursuing one. Click here to learn more and find refinance options
4. Make sure you have the right type of coverage on your insurance policies.
As you age, you may consider life insurance to help protect your dependents in case something happens to you.
You may have obtained a life insurance policy in the past but your situation may also have changed. New York Life Insurance can help find a policy that may suit your needs.
In addition to checking if you have the right Life Insurance policies, you may also want to check if you could potentially grow your savings by reducing the cost of your Auto and Home Insurance policies. SmartAsset has partnered with ComparisonAdviser to help you shop competitive insurance quotes and rates, whether you’re interested in bundling or standalone policies.
5. Take advantage of retirement catch-up rules.
If you’re debt-free at this point, you may want to funnel some of the money you’re saving on bill payments toward your retirement savings.
If you can, try to maximize your 401(k) or IRA contributions, especially if your employer matches contributions up to a certain percentage.
If you weren’t able to invest as much as you’d liked during your 40s, you can save even more each year once you turn 50 thanks to catch-up contributions.
Catch-up contributions allow people age 50 or older to save more in their 401(k)s and individual retirement accounts (IRAs) than the usual annual contribution limits set by the IRS.
In 2025, those 50 or older can contribute an additional $1,000/year to traditional and Roth IRAs, as well as an additional $7,500 to 401(k) and similar workplace accounts.
6. Design or revisit a will and/or a trust.
Beyond retirement planning, legacy planning may also be something you should start planning for ahead of time.
Do you have a will prepared? Creating a will is one of the most basic elements of estate planning.
There are different types of wills you can choose from, including a simple will. Simple or basic wills let you spell out how you want your assets to be distributed among your beneficiaries once you pass away.
However, if your assets are more complicated or you’ve accumulated more wealth, you may want to consider a trust. These estate planning vehicles also come in many forms. Is a family trust appropriate for the financial legacy you’d like to leave your heirs?
This is another area where it may be helpful to speak with a financial advisor to determine what could work best for your unique situation.
7. Consider how retirement accounts could impact future taxes.
If you’re currently investing in a traditional IRA, you’ll eventually need to begin taking required minimum distributions (RMDs) at age 73.
RMD withdrawals are treated as ordinary income. With a large IRA balance, the size of the mandatory RMDs could easily push someone into a higher tax bracket and result in a higher tax bill.
Converting your IRA to a Roth could potentially help you avoid having to pay extra income taxes from mandatory IRA withdrawals in retirement.
The catch is you may have to pay income taxes on the amount you convert at your ordinary income rate when you convert it.
Deciding whether or not to convert regular IRA assets to a Roth IRA calls for careful evaluation of your financial and tax situation. That’s where a financial advisor can be invaluable.
How to Get Help Planning Your Financial Future
Reaching age 50 can bring a fresh perspective on retirement and future financial planning, and it may never be too late to refine your strategy.
Hopefully, this list helps serve as a starting point for re-evaluating your strategy, considering high-interest savings options, maximizing retirement contributions, considering future taxes, and planning your estate.
If you need additional help planning for retirement, it could be a good idea to speak with a fiduciary financial advisor.
Fiduciaries are obligated to work in your best interest, and any conflicts of interest must be disclosed.
Finding a fiduciary shouldn't be that hard. Thankfully, now it isn't.
SmartAsset’s free matching quiz can match you with fiduciary advisors who serve your area. From there, you can compare and decide which advisor to work with. All advisors on the matching platform have been vetted through our proprietary due diligence process.
The quiz takes just a few minutes, and in many cases, you can be connected instantly with an advisor to have an introductory call.
Click Here to Get Matched With Vetted Financial Advisors
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Sources
- “How Much Money Should You Have to Hire a Financial Advisor?”, Delta Wealth Advisors (July, 2022)
