As you enter your 50s, retirement becomes a more immediate reality, and making some financial adjustments may help you better prepare for the retirement years. With fewer working years left, this is the time to optimize your strategies for contributions, catch-up contributions, and investment portfolio management. Here are some financial tasks to consider in your 50s.

Explore Catch-Up Contributions

One of the most significant advantages of reaching your 50s is the ability to make catch-up contributions to retirement accounts. These contributions allow you to increase the amount you save each year, helping you accelerate your retirement savings.

401(k) Catch-Up Contributions

For 2024, individuals aged 50 or older can contribute an additional $7,500 beyond the regular $23,000 limit. This means you can stash away up to $30,500 annually, helping you build a more robust retirement nest egg.

IRA Catch-Up Contributions

If you're contributing to an Individual Retirement Account (IRA), the annual limit is $7,000, but those over 50 can contribute an additional $1,000, bringing the total to $8,000. This extra boost can significantly increase your retirement fund over time.

Health Savings Account (HSA)

If you have a high-deductible health plan, you can contribute to an HSA. For individuals 55 and older, there's a $1,000 catch-up contribution, allowing you to set aside more pre-tax dollars for medical expenses in retirement.

Review Your Investment Portfolio

In your 50s, your investment strategy should begin to shift towards reducing risk while still seeking growth. Striking the right balance between preserving your wealth and maintaining growth potential is essential. Review your portfolio regularly to ensure it aligns with your retirement timeline and risk tolerance.

As you get closer to retirement, consider reducing exposure to volatile stocks and increasing your allocation to more stable assets like bonds or dividend-paying stocks. A balanced portfolio can protect you from market downturns while still offering growth opportunities.

A well-diversified portfolio is a good way to reduce risk of loss. Spreading risks across various asset classes, such as stocks, bonds, real estate, and cash, reduces the likelihood of being overly dependent on any one market or asset type, minimizing your exposure to risk.

This is also a good time to consider, or reconsider, income-producing investments. Investments that are structured to generate regular income, such as dividend-paying stocks, bonds, or real estate investment trusts (REITs), can improve the likelihood of a steady cash flow in retirement.

Maximize Employer Contributions

If your employer offers a 401(k) match, make sure you're contributing enough to take full advantage of this benefit. This is essentially "free money" added to your retirement account, and failing to maximize it is leaving money on the table.

Many employers match 50 percent or even 100 percent of your contributions up to a certain percentage of your salary. Ensure you contribute at least enough to receive the full match. For example, if your employer matches 50 percent of the first 6 percent of your salary you contribute, aim to contribute at least 6 percent.

Reduce Debt and Expenses

Carrying high-interest debt, such as credit card balances or personal loans, can eat into your retirement savings. Focus on reducing or eliminating these debts to free up more income for retirement contributions.

This is the time to pay down high-interest debt, such as credit cards or personal loans. Once you've eliminated this debt, you can redirect those payments into retirement savings.

This is also a good time to think about reducing living expenses, such as housing costs. Downsizing to a smaller home or relocating to a more affordable area can free up additional cash to contribute to your retirement accounts.

Delay Social Security If Possible

Delaying Social Security benefits can increase the amount you receive in the long term. Although you can begin collecting benefits as early as age 62, waiting until full retirement age (typically between 66 and 67) or even delaying until age 70 can result in significantly higher monthly payments.

For every year you delay receiving Social Security benefits past full retirement age, your benefits increase by about 8 percent. If you can afford to wait, this delay can result in substantially larger payouts.

Work with a Financial Advisor

In your 50s, working with a financial advisor can provide valuable insights into your retirement strategy. A professional can help assess your current savings, adjust your investment portfolio, and recommend strategies tailored to your specific goals.

A financial advisor can help create a detailed retirement income plan, ensuring your savings, Social Security benefits, and other income sources will cover your anticipated expenses. This plan can also help you determine when to start withdrawing from retirement accounts and how to maximize your withdrawals while minimizing taxes. Contact Mark Vergenes to learn more.

Investments in securities do not offer a fixed rate of return. Principal, yield, and/or share price will fluctuate with changes in market conditions and when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results.