By Vincent Birardi, CFP®, AIF®, Senior Wealth Advisor
Your 50s mark a critical stage in your financial journey. Retirement may be on the horizon—as soon as 10–15 years away. This decade is typically about maximizing savings, reducing risk, and preparing for the transition from growing your assets to preserving what you own.
To help you navigate investing in your 50s with confidence, here are some key best practices to focus on during this pivotal period.
Key Takeaways
- Your 50s are a pivotal decade for strengthening retirement readiness. This stage is about assessing your full financial picture, maximizing retirement and HSA contributions, fine-tuning asset allocation, and beginning to reduce risk while seeking to maintain long-term growth.
- Strong financial habits now can help improve retirement flexibility. Key practices include paying down high-interest debt, avoiding lifestyle inflation, exploring additional income streams, planning for healthcare and long-term care costs, and considering strategic Roth conversions.
- Professional guidance can help tailor your plan to your goals. HH’s CERTIFIED FINANCIAL PLANNER™ professionals and LifePhase Investing® framework support personalized decisions across savings, investing, insurance, and estate planning as you prepare for retirement.
1. Assess Your Financial Position
Start by understanding where you stand:
- Calculate your net worth: On the plus side, this should include assets like your retirement accounts, home equity, and investments. Then subtract from these your liabilities like mortgages, loans, and credit card debt.
- Use retirement calculators: Compare your projected income, from sources such as Social Security, pensions, and investments, with your anticipated retirement expenses to help identify gaps.
2. Maximize Retirement Contributions
Your 50s offer unique opportunities; keep in mind that all contributions to the accounts below offer tax-deferred or tax-free growth when you invest them:
- Catch-up contributions in 401(k)s: In 2025, you can contribute $23,500 to a 401(k), plus $7,500 extra if you’re 50+. Some plans allow an additional $11,250 for ages 60–63.
- IRA contribution limits: $7,000 plus $1,000 catch-up for those 50+.
- Health Savings Accounts (HSAs): For 2025, contribution limits are $4,300 for individuals and $8,550 for families. At 55+, add $1,000 extra. HSAs may offer triple tax benefits (pre-tax contributions, tax-free growth, and qualified withdrawals are tax-free)—ideal for future healthcare costs.
- Automate your contributions and increase them annually to help stay ahead.
3. Optimize Asset Allocation in Your Portfolio
Consider shifting your investments from a more aggressive/growth allocation to a more balanced/preservation allocation as you approach retirement:
- Diversify: Include U.S. and international stocks, bonds, and possibly REITs to help with inflation protection.
- Rebalance annually: Market swings can distort allocations. Rebalancing helps keep risk aligned with your goals.
4. Investments to Consider in Your 50s: Attempt to Reduce Risk Without Sacrificing Growth
This is time to take stock (pun intended) of your overall asset allocation. Unless you’re planning to retire during this decade, it’s likely best to maintain an overall tilt towards growth assets.
- Avoid over-concentration: Limit your exposure to holdings in your employer’s stock, in single market sectors—or in any one stock or asset class.
- Consider target-date funds: These automatically adjust risk exposure as retirement nears.
- Preserve capital: Begin shifting some assets to lower-volatility investments like bonds.
5. Pay Down Debt
Entering retirement debt-free can help give you flexibility:
- Prioritize high-interest debt (credit cards, personal loans) first.
- Consider downsizing your home or refinancing to reduce your mortgage burden.
- Freeing up your cash flow allows you to save more aggressively.
6. Plan for Your Healthcare and Long-Term Care in Retirement
Healthcare costs can derail retirement plans:
- Fidelity estimates a 65-year-old retiring in 2025 will need $172,500 for medical expenses.[1]
- Explore long-term care insurance or hybrid policies in your 50s while premiums may be lower.
- Use HSAs strategically to help with future medical expenses.
7. Consider Roth Conversions
If you anticipate a higher income in retirement, converting traditional IRA or 401(k) funds to Roth accounts in your lower-income years can:
- Aim to create tax-free income in retirement.
- Reduce future required minimum distributions (RMDs).
8. Avoid Lifestyle Inflation to Help Build Wealth in Your 50s
Peak earnings can tempt bigger spending:
- Resist “lifestyle creep.” Direct your raises and bonuses to savings.
- Automate transfers to your retirement accounts before discretionary spending.
9. Explore Additional Income Streams
- Side businesses or consulting: Extra income can boost your savings.
- Rental properties or REITs: Diversify your income sources.
10. Review Your Insurance and Estate Plans
- Update your life, disability, and umbrella liability coverage.
- Ensure that your wills, trusts, and beneficiary designations reflect your current wishes.
- Consider strategies designed to minimize estate taxes.
Professional Guidance for Investing in Your 50s and Preparing for Retirement
While these best practices can help you build a strong foundation, you don’t have to go it alone. Here at HH, our CERTIFIED FINANCIAL PLANNER™ professionals can help you explore each of the above areas and receive professional guidance that’s focused on your unique life circumstances.
Our LifePhase Investing® process is targeted to your goals and current life stage. We’ll continue to adjust and fine-tune your investments as you age beyond your 50s and transition into retirement—or wherever your life goals take you.
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser with its principal place of business in Long Beach, California. HH may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of HH, please contact HH or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com.
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[1] https://www.fidelity.com/learning-center/personal-finance/retire-better-50s
