Is It Too Late to Save for Retirement in Your 50s?

9 of the best ways to jumpstart your savings.

American workers are struggling to prop up their retirement savings. A recent Bankrate survey reports that 60% of Generation X and 56% of Baby Boomers feel behind.

If only time travel existed, we could visit our younger selves, break out an overhead projector, and dazzle with a presentation on compound returns and the importance of starting retirement savings early.

Is it too late to save for retirement in your 50s? No, and here are 9 of the best ways to catch up if you’re behind.

Contribute to Tax-Favored Accounts

“…in this world, nothing is certain except death and taxes.” – Ben Franklin

Taxes will be one of the most significant expenses in your lifetime. Avoiding taxes when you can will help grow your retirement savings tremendously. Take advantage of retirement plans offered at work, such as a 401k or 403b, and contribute to individual accounts like an IRA when possible.

The rules on retirement account eligibility are confusing and specific to your situation, but the answers can be found online. Or by walking through a flowchart like those listed below.

It is often advantageous to invest in a Roth account (401k or IRA) if you believe you’ll be in a higher tax bracket in the future. You pay taxes on contributions now and can pull money out in retirement tax-free. If, however, you believe that your tax rate will be lower in the future, a traditional 401k or IRA might be a better option.

Take into consideration how much money you expect to make in future years and if you think the government will raise or lower tax rates. All else being equal, I’d err on the side of paying taxes now as it’s nice to get them out of the way, and it’s not hard to imagine higher tax rates down the road.


Make Catch-Up Contributions

A wonderful thing happens when you turn 50, no not reading glasses, catch-up contributions! However, according to Vanguard, even though 97% of retirement plans they oversee offer catch-up contributions, only 15% of plan participants take advantage. This is a missed opportunity.

In 2022, participants can make catch-up contributions of $6,500 in plans such as 401ks and $1,000 in IRAs. Adding extra money to these tax-favored plans as you’re nearing retirement is a fantastic way to move the saving’s needle.

Don’t wait until your 50th birthday to start catch-up contributions. You’re eligible on January 1st of the year you will turn 50, so there’s no reason to wait.

Contribute to an HSA

A health savings account (HSA) may be available if you have a high-deductible health care plan. The account allows you to save money for a significant list of HSA-eligible expenses. The beauty of this account is its triple-tax-free status. You won’t pay taxes on contributions, investment growth, or when funds are spent.

Did someone say investment growth? HSA accounts allow you to invest contributions. Unfortunately, according to the Employee Benefit Research Institute, only 7-9% of participants held something other than cash. Additionally, 60% of account holders withdrew funds during the nine-year study.

I often see HSAs misused, but it’s easy to fix. Here’s how to use an HSA to extract the most value.

In 2022 contribution limits for self-only HSA coverage are $3,650 and $7,300 for a family plan. You should be making these maximum contributions, if at all possible. Your first retirement savings should be to your company retirement plan up to the match. Your second contribution should be to your HSA, and max it out if you can.

Invest the money you put into your HSA like any other retirement account. Only hold cash if you’re going to need the HSA funds soon. Optimally, you’ll want to leave your HSA alone until after you turn 65. Paying medical expenses out of pocket before age 65 will allow this tax-free account to grow more quickly.  

When you reach 65, you can withdraw HSA funds for any reason, medical or not. If you spend HSA money on something other than a medical expense, it will be treated as an IRA withdrawal and taxed. If you stick to medical expenses, withdrawals will be tax-free.

Catch-up contributions can be made once you turn 55. That’s an extra $1,000 in 2022.

It’s hard to stress how powerful a triple-tax-free account is in your retirement savings arsenal. But you must use it optimally to extract the greatest benefit by investing contributions, letting it grow untouched until at least age 65, and maxing out contributions each year.

Invest Your Raise

The good news for 2022 is the average salary in the U.S. will increase 3.4%, according to a recent WTW survey. Inflation may come into play, reducing your spending power, but this is still a fantastic opportunity to put away more money. Try not to spend the extra money in each paycheck and contribute to one of the tax-favored accounts discussed earlier.

Invest Your Bonus

It’s tempting to sit around in late December and earmark your end-of-year bonus. A new swimming pool? A European vacation? Don’t do it. Or, if you must, try spending only a quarter or half of your newfound stash. Invest the remainder. The average bonus in 2021 was 11% for exempt employees in the U.S., per research by Zippia. Investing your bonus can be a significant boost to your nest egg, and investing most, if not all, of your bonus can be a painless way to jump-start your savings.  

Get a Second Job

Today’s robust economy presents many opportunities for a second job. There are few ways better to inject significant funds into your retirement savings than working more hours in the week.

Not only can you increase your income, but you can follow pursuits that might have very little to do with your day job and more to do with beloved hobbies. A second job can also be a great way to transition to retirement. Not everyone wants to lay on a beach when they retire, and if you’d like to spend your time working in a different field, here’s a great way to test it out.

Eliminate High-Interest Debt

Not all debt is harmful, but when it has a double-digit interest rate, such as a credit card, pay it off as quickly as possible. Lower interest rate debt, within reason, is perfectly acceptable and can be paid off at a more leisurely pace. I would include mortgage debt, school, and car loans in the less-of-a-concern bucket, assuming they carry interest rates in the single digits.

Invest the money saved on interest payments for retirement. Interest can be a negative or a positive, depending on which side of it you’re on. By paying off debt and investing, you’ll make interest work for you.   

Reduce Costs

Nothing is worse than paying for things you don’t use or need. If you review your credit card statements each year, you’ll likely discover services you’re no longer using.

Is your home bigger than it needs to be? Once children have moved out, you might find yourself in a house with more space than you need. How about other big-ticket items such as cars? Do they still meet your needs, or could you get away with one less car? Is the auto you own designed to carry around the whole family? Maybe a smaller, less-expensive car now suits your needs?

I specialize in working with people who love to travel, and this is an area ripe for saving money. Consider shorter trips, stay closer to home, and travel during the slow season.

You can trim these large expenditures, and the money saved can be used for retirement. Don’t go overboard by cutting too deeply, but aggressively eliminate unnecessary costs in your life.                


Moving to save money for retirement may seem drastic, but it can contribute to your savings dramatically. I already mentioned moving into a smaller, less expensive home if you don’t need the space. Savings from downsizing may include a lower overall cost of the home, lower taxes, and lower utility bills.

There are also many ways to reduce expenses by moving to a different location. Lower tax rates stand out as a compelling way to save more money. Among the taxes that you might be able to lower are state/local income taxes, property taxes, and sales taxes. It may not take a move across the country to reduce your tax bill, sometimes a move across town or into a new county can have a big effect.  

It’s Not Too Late to Start Saving

If you feel you’re behind in saving for retirement, it’s not too late to take action! By using some of the 9 suggestions outlined above, you can aggressively make up lost ground. It’s not how you start, it’s how you finish!  

Your questions about planning for retirement and travel answered. Where to go? What to do? How to plan it? How to afford it?

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    Financial Advisor David Tuzzolino


    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.