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5 Money Moves You Definitely Need to Make If You're Over 50

Ellen Chang | FEB 4, 2019

If you’re over 50, you still have time to maximize your retirement savings. 

Recent estimates show men living to an average age of 82 and women living to be 85, so it's important to kick your savings into high-gear as you enter the final years leading up to retirement.

5 Steps to Maximize Your Retirement Savings if You’re Over 50

1. Build an emergency fund with a high-interest savings account.

Building an emergency savings account to pay for unexpected home repairs, trips to urgent care or for when you’re in between jobs can help you avoid going into debt or borrowing from your retirement. 

This CIT Bank Savings Builder Account offers 2.45% interest as long as you deposit at least $100/month or maintain a $25,000 balance. 

2. Max out your 401(k) plan -- including catch-up contributions

The majority of people do not max out their employer-sponsored, tax-advantaged 401(k) plan. Vanguard, a low cost retirement provider, reports that only 13% of employees maxed out their contribution in 2017.

The 401(k) contribution limit for 2019 is $19,000 (up from $18,500 in 2018) for employees, not including employer match contributions. If you're 50 or over, you can also contribute an extra $6,000 as a catch-up contribution to a traditional 401(k) or an extra $3,000 to a SIMPLE 401(k).

3. Contribute to a Roth IRA.

A Roth IRA lets you save with after-tax dollars, so when you withdraw money from a Roth IRA in retirement, you don’t pay taxes on it. If you think your tax bracket is lower now than it will be in retirement, a Roth IRA could be a good option. 

The Roth IRA contribution limit for 2019 is $6,000, up from $5,500.

4. Consider downsizing or refinancing your mortgage

As the kids move out, explore downsizing options and home values in your neighborhood. There are hefty transaction fees in selling your current home and buying another so we recommend targeting a home that is approximately 40% lower in price than your current home.

Refinancing can lower your interest rate and save you money over the course of paying off a mortgage. Refinancing to a longer term can lower monthly payments, freeing up money to put toward other expenses.

5. Formalize a retirement plan with a financial advisor. 

These professionals can provide expertise and guidance on all of the above, as well as how best to allocate your assets and make smart investments. 

While the value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, research suggests average additional investment returns can range from 1.5% to 4% each year. 

Voya Financial found that 79% of people who use an advisor said they “know how to pursue achieving their retirement goals.” The study also found that 59% of those who use an advisor have calculated how much they need to retire, while 52% established a formal retirement investment plan.

Chances are, there are several highly-qualified financial advisors in your town. However, it can seem daunting to choose one. 

This new tool makes it easy to find the right financial advisor for you. Now you can get matched with up to three local fiduciary investment advisors that have passed a rigorous screening process.

Follow These Steps to Get Matched With the Right Advisor for You

1. Simply enter your ZIP code below.

2. After you enter your ZIP code and answer questions about your financial goals, you can compare up to three top advisors local to you and decide which to work with.

3. Enjoy a better financial future!

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SmartAsset - copyright 2018

SmartAsset - copyright 2018

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