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How to save for retirement in your 40s and 50s

Kelly Kowalski, Cliff Noreen, and Bronwyn Shinnick

Posted on May 09, 2024

Our executives and experts team up to write educational articles, covering a variety of financial topics such as life planning, college savings, and retirement.
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This article will ...

Provide guidance for measuring where you stand on retirement.

Lay out options for increasing retirement savings — and special moves available for those over 50. 

Note strategies for starting Social Security benefits.
 
   

Are you in your late middle age and starting to wonder about your savings for retirement? And, perhaps, a little bit worried that your saving effort has been lacking? Or hurt by market volatility?

You wouldn’t be alone. The uncomfortable truth is that financial uncertainty is the top worry for those approaching retirement, according to recent MassMutual research.

It’s not too late to bounce back. Whether you’re 40, 50, or even 55 years old and decide that today is the day to begin saving in earnest, you still have time to build up income for retirement.

The first step is figuring out where you stand:

Then next is setting up your priorities and establishing an outline for making up any shortfalls. Here are some suggestions for doing that.

On your mark, set your priorities, go

Determine what you want out of your retirement…what are your priorities? Sit down with a pen and paper and start a list. Empower yourself to make the important decisions today that will set tomorrow in motion:

  • When do you want to retire?
  • Where do you want to live?
  • What kind of lifestyle do you want to lead?
  • Consider your current lifestyle. Can you cut back to save more for retirement?

These are just some of the questions you should be asking — and answering — yourself about retirement catch-up. So, take the first step and start making some decisions.

Save more, spend less

The most obvious advice still applies: save more, spend less. So, make sure you are making the most of retirement plans available to you. That means participating in employer retirement programs, like 401(k) plans, or establishing your own individual retirement account. (Related: DIY planning for retirement with IRAs)

But there’s more to it than that.

Create a budget to help you stay on track — and actually stick to it every month. Decide where you can trim your expenses. What can you live without now so you can have more later? (Related: Budget essentials)

If your budget isn't working, you may want to consider downsizing to a smaller home or a less expensive location to help maintain your standard of living. This may be a difficult exercise, but remember you’re trying to catch up. The MassMutual Retirement Savings Calculator can help.

Speaking of catching up, if you will be age 50 or older at the end of the calendar year, you can take advantage of retirement catch-up contribution options to accelerate the growth of your retirement accounts. The IRS updates contribution limits periodically; checking for the most recent information can help ensure that you are making the most of the options available to you. The bottom line: make the maximum contributions possible to your employer’s retirement plan, including any available catch-up options.

Think outside the box

There are certain financial products and savings instruments that you may not be familiar with, but that may help you get more out of your money. Many people opt to consult a financial professional to help become aware of retirement catch-up options and lay out a plan.

In addition, there may be opportunities to earn extra income, either by working extra hours or turning hobbies into side businesses, that can be considered to help catch up on retirement savings. (Related: Financially beneficial retirement hobbies)

Delay retirement (The beach will wait for you)

People are working longer than ever before. Delaying your retirement by three years from age 62 to 65 can boost your assets significantly — thanks to the combination of making extra contributions to your employer-sponsored retirement plan, not taking withdrawals, and allowing your funds more time to grow.

In addition, if you anticipate receiving Social Security retirement benefits, it’s important to understand that monthly benefits differ substantially based on when you start receiving them and the filing option you choose. For every year you postpone collecting benefits beyond your full retirement age (typically 66 or 67), you can earn an annual delayed retirement credit of up to 8 percent. That’s a big bump in benefits every year up to age 70. (Learn more: 4 ways to delay Social Security)

On the flip side, filing for benefits before your full retirement age can permanently reduce your monthly income. Benefits will decrease based on how early you retire. What’s worse, if you begin receiving Social Security benefits early, your surviving spouse may not be able to receive your full Social Security benefit if you pass away.

Conclusion

The bottom line is that there are real steps and strategies you can take today to help secure your future. It’s never too early or too late to evaluate your current retirement savings plan — or create a new one.

Discover more from MassMutual ….

Life insurance tax advantages

Retirement savings catch-up: 3 moves

Ultimate retirement guide

This article was originally published in March 2016. It has been updated.

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.