The Ultimate Guide to Saving for Retirement in Your 50s

Once you reach your 50s, retirement starts to feel more like a realistic goal and less like a distant dream. If you haven't saved as much for retirement as you wanted to, you may worry about what you'll do after leaving the workforce. But it's never too late to start making your retirement plan and savings goals a priority. Follow these steps for a comprehensive guide to saving for retirement at 50 — and beyond.

Know your goals

Before you do anything else, think about the goals you have for your retirement. What does your ideal retirement look like? Consider factors such as the place you wish to live, the hobbies you want to pursue, or the trips you plan to take. Your goals will directly impact the amount you must save to live comfortably. For example, someone who wishes to travel the world will probably need more money than somebody who wants to live modestly in a home they've already paid off.

As you set your goals, think realistically about the timeline for your retirement. You can start receiving your Social Security retirement benefits as early as age 62. But you'll receive reduced monthly benefits if you take them before your full retirement age. For this reason, more people now plan to retire later in life. According to recent Gallup research, the average target retirement age has increased to 66. Think about your future goals and the lifestyle you want to have as you decide at what age you wish to retire.

Create a budget

Once you know your goals, you can create a budget to maximize your retirement savings. There's no set amount of money you should aim to save, though a general rule is to have 80% of your pre-retirement income available each year. It's a good place to start if you're not sure how much to save, but you may also want to meet with a financial adviser for more guidance.

As you budget for retirement, take a look at your current expenses. Go through your past bank statements or use a budgeting app to review how you're currently spending your money. Do you have expenses you can cut back on to save money each month? For example, you might be able to cancel streaming services you don't use, or you may delay buying the new car you've been eyeing to avoid a monthly loan payment. Finding areas where you can cut expenses can allow you to put that money toward your retirement savings instead.

Catch up on contributions

If you don't have a retirement account in your 50s, such as a 401(k) or an individual retirement account, open one to start your contributions. The Internal Revenue Service sets limits on how much you can make in regular contributions to retirement accounts each year. In 2024, you're allowed to contribute up to $23,000 to a 401(k) and up to $7,000 to a traditional IRA or a Roth IRA.

Once you reach age 50, the IRS also allows you to make catch-up contributions once you've maxed out your regular contributions for the year. For 2024, you can make up to $7,500 in catch-up contributions to a 401(k), potentially increasing your total contribution amount to $30,500 for the year. If you have an IRA, you can contribute an additional $1,000, for a total of $8,000.

Maximizing the contributions you make to these accounts can help you save for retirement over the next decade or two. If your employer offers a 401(k) match, make sure you're contributing at least enough to earn it. Consider having a 401(k) and an IRA to work aggressively toward your retirement savings goals.

Contribute to an annuity

An annuity can be a great option to consider in your 50s as you're starting to think more seriously about the income you'll need in retirement. An annuity is a financial product that can provide guaranteed income throughout your retirement. You contribute a lump sum or a series of payments, and this money typically grows tax-deferred until your retirement. At this time, you start to receive payments from the annuity over a specified period or for the rest of your life.

You can use an annuity to supplement your retirement savings and other income, such as Social Security payments. There are several types of annuities available, including fixed index and variable annuities. A fixed index annuity provides a fixed rate of return. It's a good option if you're seeking an opportunity with minimal risk. Variable annuities generally have more risk but offer the potential for higher returns since they're tied to investment funds.

When deciding to contribute to an annuity, it's helpful to speak with an adviser who can guide you on the best options for your retirement goals. You can also review our comprehensive Annuity Buying Guide to learn about the process, timeline, and types of annuities. With Blueprint Income, you can compare annuities, access useful resources, and speak with our knowledgeable annuity consultants to learn more about this source of retirement income and prepare for your future.

Open a high-yield savings account

Let your money work for you by opening a high-yield savings account. A high-yield savings account has a higher annual percentage yield than a traditional savings account. Some of the best high-yield savings accounts offer up to 5% or 6% APY, according to CNBC Select. With higher interest rates, these accounts can help you save more money quickly with minimal risk.

Research different high-yield savings accounts to find one that meets your needs and retirement goals. Make sure you pay attention to the fine print when opening this type of savings account. Some high-yield savings accounts may have transfer limits, transaction fees, or other conditions. While they may not be deal breakers to you, it's good to be aware of them so you can avoid paying penalties.

Pay down debts

Paying down your debts becomes more urgent as you start nearing retirement. Start by paying down debts with the highest interest rates, such as credit cards. Get rid of expensive debts so you can start putting your money toward your retirement rather than interest payments.

If you're paying off a mortgage on your home in your 50s, consider whether you can afford to make extra payments to pay down this debt faster. When you own your home before you reach retirement, it's one less major expense you need to budget for. Paying off a mortgage can provide some security, knowing you'll have a place to live comfortably in your retirement.

Consider a side job

Being in your 50s, you likely have decades of experience in your industry. Use the knowledge and skills you've gained to start a side job. You can put the extra money you make toward your retirement fund. Consider doing freelance consulting work, becoming a teacher or coach in your field, or creating products you can sell to others.

If the thought of doing more work before retirement doesn't appeal to you, consider whether you can use your hobbies or passions to make some extra money. For example, if you love animals, you might offer your services as a pet sitter or a dog walker. If you enjoy chatting with others and drinking coffee, you might get a part-time job as a barista at a local coffee shop. You can use the additional income you make to save more quickly for retirement.

Don't dwell on the past

When you turn 50, it's common to look back over your past 30 years of employment and wish you'd done more to save for retirement. However, try not to dwell on the past. You have plenty of time to start making wise choices to plan for your financial security in retirement, no matter how much you've saved up to this point.

As you move forward, remember the goals you have for your retirement. Stick to your budget and find ways to pay down your debts so you can keep saving. Continue making contributions to your retirement plans, savings accounts, and annuities. With some planning, you'll be well on your way to meeting your financial goals for retirement.

Plan ahead for financial security in your retirement

Are you ready to take your retirement planning to the next level? Whether you're just starting to save or you've already built a sizable nest egg, Blueprint Income can help you achieve financial security in retirement. Speak with one of our expert annuity consultants to discuss how an annuity may be beneficial to saving for retirement at 50 and older. We're here to offer guidance and support so you can feel confident going into your next chapter. Visit our website to learn more information and get started today.

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