Katherine Tierney, CFA®
Senior Retirement Strategist, Client Needs Research

In your 50s, you're certainly closer to retirement, but how close largely depends on the goals you've set and are tracking toward.

If you’re planning to retire within the next five years — the average retirement age in the U.S. is 62* – go to the “Financial Strategies for your 60s” page to find suggestions tailored to your situation. If, however, you’re planning to wait until age 65 or later to retire, stay here to read some steps you can take now to make sure you have everything on track to live your golden years on your terms.

Understand your full financial picture

As you enter this decade, retirement is no longer a distant prospect. It’s closer to reality. Perhaps you also have a few short-term goals before you get there, such as a home renovation or a dream vacation.

Now is the time to examine your goals and ensure your finances are in order. A good first step is to get a clear understanding of your full financial picture — your assets, liabilities, income and expenses. Doing so will help you assess whether you're on track to meet your financial goals.

Your current spending can also serve as a starting point for estimating your spending in retirement, although you'll likely need to make some adjustments. For example, your housing costs will decrease once you pay off your mortgage, but your health care costs probably will increase as you age.

If you're not on track, you may need to think about ways to rein in your expenses so you can increase how much you're saving each month. This may include buying groceries at less expensive stores or eating at home more often instead of at restaurants.

Reflect on your retirement goals

Successful retirement is living on your terms, but what are those terms? Consider your ideal retirement lifestyle: How do you want to spend your time? What new hobbies do you want to pick up? Where do you want to go? Who do you want to see?

Answering those questions will give you a clearer idea of how much money you’ll need in the next phase of your life (PDF), which will help inform your saving and investment strategies in an era when attitudes about what retirement means are evolving.

While more than 25% of retirees and pre-retirees today still view retirement as a time for rest and relaxation, 55% view it as a new chapter in life with a variety of possibilities that include work, according to the 2022 study on which Edward Jones partnered with Age Wave, a thought leader on aging and longevity.

Some 60% of retirees and pre-retirees say their ideal balance between work and leisure in retirement includes working in some way, whether it be part-time, cycling between work and leisure, or even working full-time after retiring.

Additionally, retirement planning and preparation are not solely about finances: A majority of retirees say that health, family and purpose are all important to their well-being. Many retirees struggle to find a sense of purpose, determine the best way to organize their time and how to engage socially, post-work.

In fact, 54% of retirees reported wishing they had planned better for the non-financial aspects of their retirement. One way you can do that is by “test driving” activities before you retire to see how they suit you. That can help reduce the feelings of disorientation and uncertainty common among many new retirees.

Leverage catch-up contributions

With retirement potentially around the corner, you'll want to make sure you're saving enough each month to achieve the retirement you desire.

Employer retirement plans (such as 401(k)s and IRAs) provide significant tax benefits when it comes to saving for retirement. And once you turn 50, you can take advantage of “catch-up” contributions.

In 2022, 401(k) investors can contribute up to $20,500 to their plans. Those older than 50, however, can contribute an additional $6,500, for a total of $27,000.

The contribution limit for an IRA in 2022 is $6,000 with an additional $1,000 contribution available for individuals ages 50 and older (for a total of $7,000).

If you're already hitting these limits, other products and strategies may allow you to contribute additional amounts on a tax-deferred basis. You can also move extra savings to a taxable investment account, such as a brokerage account, which lets you buy and sell stocks, bonds, exchange traded funds (ETFs), index funds and other investments. While such an account doesn’t offer tax benefits, it does offer much more flexibility than tax-advantaged accounts.

What should you invest in? Consider the perspectives below to craft a strategy that fits your current life stage.

Develop a smart investment strategy

As always, how you balance your portfolio should be based on your goals, when you'll need to access your money, and your comfort with risk .

When it comes to saving for retirement, you can afford to take on more risk in your earlier years. As you draw closer and closer to retirement, though, you may want to be more balanced with your investments.

Growth still matters because your retirement could be 25 or 30 years long and you'll need investments that can keep up with inflation. But you'll also need investments designed to help provide for your income needs in retirement and provide more stability.

Also consider minimizing your exposure to higher-risk investments and instead invest more in stable stocks, government and investment-grade bonds, and cash.

Review your investment portfolio with your Edward Jones financial advisor to make sure it still matches your life stage and long-term goals.

Pay off your debt

Got debt? Now would be a great time to pay it down, so you don't have to carry that burden into retirement.

Credit card debt is a good place to start, since it usually comes with high interest rates.

Begin by paying off the debt with the highest interest rate, then move on to the next-highest. When all your debts have been paid down, think about directing your extra cash toward your other goals.

Consider your legacy goals

As retirement draws near, you'll also want to think about your legacy goals. After all, you can't spend in retirement what you want to leave as a legacy, so you'll want to assess your ability to meet both goals if leaving a financial legacy is important to you. You may also want to invest the assets you plan to leave as a legacy differently than you would retirement assets.

It's also a good practice to regularly review your estate plan to ensure your documentation is up-to-date and aligned with your wishes. If you don't yet have an estate plan, there is no better time to start one. Be sure your plan covers what you want to happen in the event you become unable to make financial and medical decisions for yourself as well as your death.

How Edward Jones can help

A financial advisor can help you craft an effective strategy for achieving and maintaining the retirement lifestyle you want as well as reaching other financial goals. If you’re interested in learning more, reach out to an Edward Jones financial advisor today.

Important information:

Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.

* Gallup poll (2021)