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Retirement Savings Tips for Those 50+

If you find yourself with an empty nest and a well-paying job, it may be tempting to indulge in a few splurges that were not possible when college tuition or mortgage payments were due. But before throwing caution to the wind financially, remember that you could be passing up your last opportunity to potentially make headway in investing for retirement. Here are three steps to consider.

1. Save more. Trimming living expenses by an additional $1,000 or $2,000 a year might make a difference at retirement.
2. Plan to work longer than you had initially intended. Even a small difference such as one or two years may help.
3. Live more efficiently. This could include moving to a more affordable home, downsizing from two cars to one, and limiting restaurant and entertainment expenses.

How to Do It

There are many steps that investors can take to follow the suggested three-step plan. You may want to consider:

• Catching up. If you have access to a 401(k) plan at work, consider making the $7,500 catch-up contribution that is available to participants age 50 and older. Note that you are first required to contribute the annual employee maximum, typically $23,00 (for 2024), before making the catch-up contribution.
• Funding an IRA. For 2024, investors age 50 and older can contribute up $8,000 annually (the $7,000 annual contribution plus an additional catch-up contribution of $1,000) to a traditional individual retirement account (IRA) or a Roth IRA. An investor in his or her 50s who contributes the maximum amounts to both a 401(k) and an IRA could potentially accelerate retirement savings by $38,500 a year.
• Considering dividends. If you do not have access to a 401(k), or you already contribute the maximum to your qualified retirement accounts, consider stocks that offer dividend reinvestment. Reinvesting your dividends can help to grow your account balance over time.¹
• Making little cuts. Consider how you can trim expenses while continuing to enjoy life. In addition to the strategies mentioned above, you may be able to eliminate premium cable channels that you do not watch, memberships that you do not use regularly, household help for chores you could do yourself, and other options.
• Reviewing strategies for potentially working longer. You may be able to learn new skills that could increase your marketability to potential employers. Even a part-time job could reduce your need to deplete retirement assets.
• Not giving in to fear. Many preretirees falsely believe that there is nothing they can do to build retirement assets and, as a result, do nothing. Remember that you control how much you invest and, in many areas, how much you spend. Make a plan and stick with it.