How to Save For Retirement in Your 40s and 50s

Life comes at you fast. Before you know it, it’s time to start thinking about retirement. While some have the luxury of building their retirement savings at a young age, others must wait until later in life. That doesn't mean you still can't develop a strategy, though.

Here's how to save for retirement in your 40s or 50s:

Decide what you want your retirement to look like
The first step is to daydream. We're serious—take a few days to determine what your perfect retirement looks like and what it would take to achieve it. To help make that goal a reality, try a retirement income calculator. It will allow you to consistently evaluate your preparedness by looking at changes in economic climate, inflation, achievable returns and how your personal situation will affect your retirement planning.

Cut the kids off
This one sounds harsh—and difficult—but if you want to start saving serious money for retirement, you'll need to stop handing extra cash over to your adult kids. Before they're old enough to move out, start talking to your children about what it takes to become financially independent. Be real with them about your plans to stop supplementing their wants and needs, and why, so they can plan accordingly.

Max out your employer's retirement plan
If you haven’t already done so, enroll in your company-sponsored 401(k) plan, especially if they offer matching contributions. Get the benefit of pre-tax deposits as well as the potential for higher returns. Since you won't be able to access this 401(k) money before a certain age without a penalty, there is an even greater incentive to deposit what you can and let it be. For 2023, the maximum contribution (before any matching funds) is $22,500 with a $6,500 catch-up contribution limit for those 50 and above.

Open your own Roth IRA
Another option for retirement savings is a Roth IRA. A Roth IRA has similar rules about accessing the account before retirement, but is run through your financial institution instead of through your employer’s plan. Consistently deposit what you can, and over time, you’ll see steady growth. Contributions are not deductible, which means you'll have to pay income tax on the money you add to the account, but distributions are tax-free if the owner is at least 59 ½ years old and the account is at least 5 years old.

Pay off your debt
Debt, including your mortgage, can certainly stand in the way of your dream retirement, so the more quickly you pay it off, the better. Commit to a specific strategy—like the snowball method or avalanche method—to stay on track.

Whatever steps you take to save for retirement, take the time to meet with an expert. A professional financial advisor can often be the difference between having the retirement you want and the retirement you wish you had.

Get started today by scheduling an appointment with a wealth advisor.