What is the best way to save for retirement after 50?
Short answerMaximize tax-advantaged accounts like 401(k)s and IRAs, take advantage of catch-up contributions, and consider working a few years longer. A diversified mix of stocks and bonds is still important, but you may want to gradually reduce risk.
Use catch-up contributions
Once you turn 50, you can contribute extra to most retirement accounts. For 2024, the 401(k) catch-up is $7,500, and the IRA catch-up is $1,000. These limits may be indexed for inflation.
If you're self-employed, a Solo 401(k) or SEP IRA allows even higher contributions. These catch-up amounts let you save more in your peak earning years.
- 401(k) catch-up: $7,500 (2024)
- IRA catch-up: $1,000 (not indexed)
- Solo 401(k) and SEP IRA have higher limits
Adjust your investment mix
As you get closer to retirement, you may want to shift toward more conservative investments to protect your savings. But you still need growth to outpace inflation over a 20–30 year retirement.
Many experts suggest keeping at least 40–50% in stocks even in retirement. Consider target-date funds or a balanced portfolio that automatically adjusts.
- Review your asset allocation annually
- Consider a Roth conversion in lower-income years
- Don't forget to invest your HSA for retirement healthcare costs
Common mistakes
- Being too conservative too early and missing out on growth needed to last 30 years.
- Forgetting to max out catch-up contributions when you're eligible.
- Relying only on a 401(k) and ignoring IRAs, HSAs, and taxable accounts.
