For a lot of people, turning fifty means entering a decade of major life changes. Kids are growing up and leaving the house. Parents are growing older. You’re hitting a professional peak, and earning more than you ever have before. In the middle of all of this is a growing awareness that retirement is just around the corner.

Whether you’re starting with some savings or no savings, your fifties are the ideal time to start taking saving for retirement seriously. But retirement planning isn’t all about investing or savings or Social Security. Setting yourself up for a successful retirement also means getting your financial house in order by eliminating debt, setting up a Health Savings Account, generating recurring income, and reassessing your budget, insurance, and wills.

Set goals and eliminate debt

Before you do anything else in this article, it’s important to evaluate where you’re at. How much do you have in savings, both in retirement accounts and elsewhere? How much is left on your mortgage? Can you expect income from other sources, like pensions, annuities, or other assets?

A Certified Financial Planner can help you take this information and set accurate and realistic savings goals, as well as coming up with strategies for both a comfortable living in retirement and a plan to get there.

This information can also help you visualize how paying down debt can actually be more important than saving money. Depending on your debt load, going into retirement with too much debt can be worse than not having enough savings.

Don't forget about Social Security

Social Security is the foundation of your retirement income. It’s an inflation-proof, guaranteed source of income that will last the rest of your life. That’s why it’s crucial to make sure that you get the largest monthly benefit possible.

While you can start getting Social Security benefits at age 62, these are reduced benefits. To get 100% of the benefit amount that you earned, you need to wait until your full retirement age (between age 66 and 67, depending on what year you were born). If you wait until sometime between your full retirement age and age 70, you can even earn delayed retirement credits.

We suggest waiting as long as possible to take Social Security benefits, especially if you don’t have enough savings to last your entire retirement. Your fifties are an ideal time to set up a strategy to make that work, such as using savings to fund your retirement up until age 70.

Take advantage of catch-up contributions

Catch-up contributions are a useful tool for those looking to put aside money for retirement. If you’re over 50, you can make additional contributions to tax-advantaged retirement accounts like 401(k)s and IRAs on top of the existing standard contribution limit. Here are the catch-up contribution limits for 2021:

Tax-advantaged retirement accounts are an important part of many retirement plans, as the tax benefits can be extremely helpful both now and in your retirement years.

If you have existing retirement accounts, or any other type of investment accounts, your fifties are a good time to re-evaluate your asset allocation. Typically, as your time horizon gets shorter and you get closer to retirement, you’ll want to move away from stocks, which are more volatile in the short-term, and towards bonds.

Create a Health Savings Account (HSA)

It’s a simple fact of life that as we get older, we’re more likely to need medical services. Luckily, if you have a high-deductible health insurance plan, you can put aside money for future medical expenses in a special type of savings account called a Health Savings Account (HSA).

Similar to a traditional IRA, contributions to HSAs are tax-deductible, and any earnings, such as interest and dividends, are federal tax-exempt. Withdrawals from an HSA are tax-free as well, as long the money is used for a qualified medical expense.

HSAs never expire, even if your healthcare changes and you are unable to make additional contributions. You can even pass your HSA on to a beneficiary in the event that you die unexpectedly.

What counts as a high-deductible health insurance plan changes every year – in 2021, a health insurance is considered to have a high deductible if it’s over $1,400 for individuals and $2,800 for family plans.

There’s a limit to how much you can contribute to an HSA as well – in 2021, individuals can contribute up to $3,600 and those with family plans can contribute up to $7,200. If you’re 50 or older, you can also make an additional catch-up contribution of $1,000.

If you qualify for one, HSAs can be an incredibly useful part of a retirement plan, as it allows you to save money for future medical expenses while reducing your tax burden.

Reassess everything – budget, insurance, housing, and wills

A good retirement plan goes beyond savings and investments. Since retirement is such a major life change, it’s good to reassess every part of your finances, from your monthly budget to where you live to who’s going to get what when you die.

First, your budget. If you’re worried about not having enough money in retirement, it makes sense to start trimming your budget now. Not only can you use some of that savings to help fund retirement accounts or pay down debt, but you’ll be better prepared for when your income decreases.

It’s also a good idea to reassess your housing. Many people look towards downsizing in retirement, as they not only need less space, but it saves money, too. As your kids grow up and leave the house, it also makes sense to take a fresh look at your insurance needs. You’ll also want to update your will, and think about whether or not you want to set up a trust for your children.

Bottom line

Your fifties are a great time to clean up your financial house and prepare for retirement. Whether you’ve been saving for decades or entering your fifties with no savings, there’s a lot you can do in your fifties to set yourself up for a comfortable retirement. Next steps? Talk to a Certified Financial Planner, who can take your financial information and your goals for retirement and build a roadmap for how you’re going to get there.

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