Savings for retirement is undoubtedly one of the important financial goals in your life. That’s because it affects your financial security and quality of life, especially after you leave the workforce. It’s not too late to start saving at any age, but the earlier you start, the better you get for a variety of reasons.
Not only do you ensure your financial independence, you will benefit from combined growth, protect yourself from inflation, and do not need to rely on social security as your sole source of income.
Key takeout
Fast and better
It is important to start saving for retirement, regardless of age. But the earlier you start, the better. That’s because the longer you wait, the more money you need to save. As you save, it’s important to keep a focused goal in mind, even if it ends up being economic independence, according to Andre Small, according to financial planners in small investments.
“Even for young clients who are leaving 35 years away, I can focus on what they value most and guide their plans and savings strategies for retirement,” he says. “So yes, I’ll start saving early and often, but I’ll do that with a plan that matches your worth and desired retirement.”
Starting your retirement savings plan early will provide many benefits.
Your money has time to grow. Because it works on principles that exacerbate interest. The money you contribute will earn interest, and it will also accumulate profits. This will give you a bigger retirement plan over time. Because you spend more time, you will have more time to recover from market risk. When you’re younger, you can invest in high-risk investments because there is greater risk tolerance. When you’re younger, you can invest in a more diverse asset class. This allows you to manage more risks. So, if the stocks go wrong, bond returns can balance those losses. The same goes for the opposite. When you are young, your financial burden will be lower. You can afford to invest a small amount when you are younger, as you have longer time before you retire.
Resignation benchmark
There are specific benchmarks that suggest that experts will stick with investors when it comes to retirement plans. The chart below highlights the amounts to consider savings for each age group.
Age Range Benchmark 30 0.5 x Salary 35 1 x 1.5 x Salary 40 1.5 x 2.5 x Salary 45 2.5 x 4 x Salary
Therefore, if you are 50 years old, you will need to save 3.5-5.5 times your salary for retirement. That benchmark becomes wider the closer you get to quit. Therefore, it is important to determine the age you want to retire.
“Someone in her 50s should make plans as she approaches the retirement year she wants,” Small says. “The 50s are the best time to assess values, goals, and how someone aligns with where they are now.”
You may not have time on your side, but that doesn’t mean you should delay savings. Small says he should plan as he approaches his desired retirement year. Being in your 50s is the perfect time to assess your values ​​and goals.
If you are single, married to one income, or married to two income, remember that benchmarks need to be adjusted. According to Small:
Starting with current expenses (minus your existing savings strategy and other expenses you may not expect in the future), as a benchmark to determine what you need for retirement. Adjust for inflation for the next few years before retirement. Once this cost number is determined, you can decide what you need to save right now.
Tip
Make sure you have an emergency fund. This is money that is reserved in liquid accounts, such as high-yield savings and money market accounts. You should save at least 3-6 months’ worth of money.
Factors to consider
There are many different factors that you need to consider when you are approaching or in your 50s. For example, check and optimize your investment strategy. Portfolio returns should not be compared to an S&P 500 or other index at this point in your investment career.
“Returns should be assessed based on what is needed to support retirement income goals,” Small says. This is because it means that your situation may not need to take on additional stock market risks to get the retirement lifestyle you want.
Below are a few other things to consider when heading out of retirement.
Maximize your contribution
Small says they need to use an employer-sponsored retirement plan, especially if they offer employer matches. This is money that your company contributes based on how much you put aside on your behalf. Simply put, it’s the free money you give if you don’t contribute. The 401(k) planned contribution limit is $23,500 in 2025, and $7,500 for those over 50 will be added.
And don’t forget to invest in traditional individual retirement accounts (IRAs). These plans allow you to donate up to $8,000 if you are over 50 in 2025.
The same restrictions apply to the Roth IRA, but you must meet certain income thresholds. The table below highlights income eligibility for 2025.
Filing Status Modified Adjusted Adjusted Total Income (MAGI) Range Allowed Locations $150,000 $150,000 $150,000 $80,000 $150,000 – 165,000 $165,000 $0 Married filing (if you didn’t live with your spouse for the entire year) $150,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $0 $236,000 $8,000 $236,000 $8,000 $8,000 $ 236,000-246,000 $246,000 $246,000 $236,000 $ under 8,000 $236,000 – 246,000 $246,000 $246,000 $246,000 $150,000 $150,000 $165,000
Reduce your debt
Look for opportunities to reduce your debt. Take a proactive approach to tackling your debt. This can be done by prioritizing high-profit obligations such as credit cards and personal loans. Pay your debts faster using debt repayment strategies such as the debt avalanche and the debt snowball method.
Consider downsizing after turning 50, especially if your child leaves the house. Moving to a small home will save you more money for retirement by reducing your living expenses and releasing monthly bills.
Reduce unnecessary expenses such as unused streaming services and memberships. Eliminate essential spending like that extra night out. Remember that making small sacrifices can help you in the long run.
Adjust your retirement expectations
You may need to make mindful changes when you retire. Realistically. If you haven’t started saving for retirement, you may need to delay your retirement as you cannot expect to live a luxurious lifestyle with just Social Security at age 65. You can also consider the following:
Make a healthcare plan
Healthcare is one of the biggest concerns for retirees. So, even before you leave the workforce, you need to plan your healthcare expenses.
“Personal health is unique and you may need to plan additional medical expenses when you retire,” Small says.
Don’t forget that people live long. According to the Centers for Disease Control and Prevention, as of 2023, the average life expectancy in the US was 78.4 years (75.8 for men and 81.1 for women). With Medicare, you will need to reserve cash to cover these costs as you will have out-of-pocket costs, coinsurance, premiums and deductibles.
Conclusion
Not everyone has the opportunity to start saving for retirement early, because everyone has a different financial situation. But make sure you take all the opportunities you get. The points above serve as general guidelines for people in their 50s, but we recommend sitting down with a financial expert and planning and laying a solid foundation for retirement planning.
