Learn How To Build Wealth In Your 50s For Retirement
Are you interested in building wealth after 50? If so, you have come to the right place.
Because I’m going to address these topics about financial planning in your 50s:
- Making money
- Saving money
- Managing debt
- Saving for retirement
- Managing financial risk
- Investing wisely
Let’s not waste a minute. And get started now. Because your retirement (and mine) is right around the corner.
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
10 Rules For Building Wealth After 50
Here are my top 10 tips for building wealth after 50:
- Create a financial plan (or update your old one)
- Develop additional income sources
- Downsize your housing
- Keep college expenses in check
- Live below your means
- Manage debt wisely
- Be smart with your retirement savings
- Make the right decisions about insurance
- Invest with an eye on risk versus reward
- Monitor progress & adjust as you go
These ten ways to build wealth in your 50s will outline what is to come. But, I have several sub-strategies to create wealth for each topic.
So, let’s get started with financial planning in your 50s. Use the following 10 points to formulate your money goals.
1. Create Or Update Your Financial Plan
Accomplishing anything meaningful in life requires a plan. Here are several things to address in your plan for building wealth at 50…
Update Your Monthly Budget To Build Wealth In Your 50s
If you haven’t looked at your monthly expenses in a while. Then, find your last budget for growing wealth in your 40s because a budget remains a big part of personal finance in your 50s.
Using your favorite app or spreadsheet. Itemize all of your expenses by category.
To the best of your ability, estimate your expenses for the next 12 months. Then, do the same for your income sources.
Your budget is a handy tool for financial planning. We’ll discuss its uses further as we discuss the other topics about money in your 50s.
Assess Your Parent’s Financial Situation
It’s not easy. But talk to your parents about their finances.
Because you need to determine which of these situations apply to you and your parents:
- They will need financial assistance
- You will be receiving an inheritance
- No financial impact (neither 1 nor 2 apply)
Once you know the answer. Factor it into your budget during your 50s when the time is right.
Use A Financial Advisor For Building Wealth After 50
Financial planning in your 50s is much more than a budget. That considers the financial impact of your parent’s situation.
You need to create a bigger-picture plan that covers the next several years before you turn 60.
Use the topics that follow as key elements to your longer-term plan. If you are not comfortable doing so. Then, consider hiring a fee-only financial advisor.
They should have the training and experience to put together a comprehensive financial plan, which addresses the next nine ways to build wealth in your 50s.
Next, let’s talk about making money over 50.
2. Develop Additional Income Sources
Knowing how to make money in your 50s is essential because the value of your skills and experience will rarely be higher.
So, here are some suggestions to increase income in your 50s…
Leverage Your Employer For More Money
Sometimes, the quickest path to making more money is your current employer. Here are your options:
- Ask for a raise
- Request a larger annual bonus opportunity
- Inquire about other financial incentives
But be prepared to defend your case for more pay.
Be able to articulate what you deliver today. And what more value you can provide in the future. In exchange for additional pay.
Use Your Skills For Side Work
Make some additional money doing side work. Here are some things to consider…
First of all, do you work in a business? Then what skills do you have? That another business would pay you for.
Furthermore, because of the newfound acceptance of remote work. You may be able to fill some of your idle evenings and weekend time doing project or consulting work.
Or, do you work in a trade? Because plumbers, electricians, painters, and many others can make additional money. Doing side work for friends, family, and neighbors.
Change Employers Only If It Makes Sense
Taking your skills to a new employer is also a fast way to make more money. But do so only if you are confident it’s a good move.
By now, you probably understand something important. Specifically, “the grass isn’t always greener on the other side.”
Also, if the new employer doesn’t work out, finding a new job in your 50s can be challenging, even if you end up out of work by no fault of your own.
Whatever you decide, make sure your resume is always in top shape so you can take advantage of any unexpected or expected opportunities as they arise.
Next, building wealth in your 50s means leveraging real estate.
Consider Real Estate Rentals For Building Wealth After 50
Existing or new real estate purchases can be sources of extra income from rent and capital appreciation.
Consider these options:
Rent out a room in your home. This is made easier these days with services like Airbnb.
Rent out your vacation home. A viable option for those who own such a property. In a location where people like to relax and recreate.
Flip properties. This is a good option if you have the funds to buy a fixer-upper. And have the skills to do most of the renovations yourself. Then sell it for profit.
Buy a rental property. This approach requires investment, too, but it allows you to separate your tenants from your life.
Buy a multi-unit rental. Sell your primary residence and buy a multi-unit rental property. Live in one unit and rent out the rest. It’s a great way to downsize and make some additional money.
Okay. That covers how to make additional money in your 50s. Be sure to use the extra money you make wisely. I will have more on that later.
Our next topic is saving money in your 50s. I just mentioned downsizing, so let’s continue with that topic.
3. Downsize Your Housing
Take a look at the budget you put together. It’s the one you prepared as part of the first step to building wealth in your 50s.
Because housing costs probably make up your largest spending category.
Thus, consider downsizing to a smaller and less expensive home. Or, a more affordable location in which to live.
What’s the next area in our guide about how to build wealth after 50? Planning for your kids’ education.
4. Watch Out For College Expenses And Student Loans
If you have children and they are attending college, don’t let it derail your finances in your 50s.
Because kids can borrow money for school, but you can’t borrow money for retirement.
First of all, keep college costs down. I know it’s difficult to deny your children the best in education. But it’s essential to be financially responsible about it.
So, keep costs down by having them stay at home and attend a local college, at least for the first couple of years.
Furthermore, they should be allowed to take on student loans before they reach into your pocketbook to pay for tuition, fees, and housing. I know excessive student debt is a hot topic these days.
But if by the time you are 60. And have your retirement planning needs taken care of. Then, you can consider helping your children pay off their student loans.
5. Live Below Your Means
Next, take another look at your budget. And review all of your non-housing-related costs.
See what expenses you can reduce. Or better yet, eliminate. Here are a few good habits for lowering costs.
Spend on necessities and the discretionary items and activities that you truly value in life. Then, reduce or eliminate everything else.
Next, we all buy things online these days. So, save on your purchases with the Rakuten rebate app.
In addition, Rakuten gives you $10 cash. Just for signing up and making your first buy.
Next up, we are moving onto debt management.
Because debt is an important part of your finances. And, one of many interesting aspects about building wealth after 50.
6. Manage Debt Wisely
In your 50s, it’s time to get very serious about debt reduction. Here’s what you should do.
First, eliminate all non-mortgage debt. By the time you are 60, all non-mortgage debt must go. And by all means, pay off your credit cards first.
Second, plan to pay off the mortgage on your primary residence. It is a great goal not to have mortgage debt by the time you are 60.
So, pull up a mortgage calculator. To see when you can pay it off.
Because it will allow you to funnel more money into the best ways to save for retirement in your 50s and 60s.
Then, there are mortgages on property investments from which you earn rent. That debt is okay to leave in place as long as your rental properties generate positive cash flow after you pay the monthly mortgage and all other expenses.
Finally, if you need to consolidate your debts, finance a rental property, or want to refinance your home loan, be sure to shop online for the best rates and deals.
Next up, the best ways to save for retirement at 50…
7. Be Smart With Your Retirement Savings
As I said earlier, your retirement years are right around the corner. Make them the best they can be by doing these savings activities in your 50s.
Assess Your Retirement Finances For Building Wealth After 50
First of all, calculate how much retirement savings you have accumulated. Then, determine how much you will need to live off investments.
Remember to factor in income from Social Security and pension benefits if you are one of the few lucky ones to have a pension plan.
Chances are you have a gap between the savings required for retirement and what you have accumulated thus far.
Here’s what to do about it…
Take Advantage of Catch Up Contributions
Catch-up contributions allow people age 50 or older to save more in their 401(k)s and individual retirement accounts (IRAs) compared to the annual contribution limits set by the IRS for everyone else.
So, max out your employer-sponsored retirement account. Using catch-up contributions.
They are a new option at your disposal when you turn 50. It is one of many good financial habits to start when you hit that magic age.
Open And Fund A Roth IRA for Building Wealth After 50
You may be participating in your employer’s retirement plan. But have you considered a Roth IRA yet?
It is another of the best ways to save for retirement in your 50s, in addition to your employer’s retirement plan.
Have you been putting this off? Don’t delay because it’s easy to open an IRA.
Don’t Make Early Withdrawals From Retirement Accounts
Whatever you do, don’t draw down savings from your retirement accounts early. This happens when people have unexpected expenses or a surprise job loss.
That’s what an emergency fund is for. So, ensure you have 3-6 months of expenses in an emergency fund.
Put the money in a high-interest savings account. And don’t touch it unless you have an emergency.
Because having this fund will prevent you from drawing down your retirement savings. At the worst possible time. In your 50s before retirement.
Next up, managing financial risks in your 50s. By having the right insurance in place…
8. Make The Right Decisions About Insurance
Thinking about your insurance coverage every few years is always a good idea, especially in your 50s.
I will assume that by this stage of life. You have your home and auto insurance figured out.
So, as you hit your 50s, focus on these insurance needs…
Health insurance. As we get older, health issues crop up more often.
Be sure to have a good health insurance plan in place. Also, consider opening a health savings account for the tax benefits it provides.
Life insurance. As long as you have loved ones dependent on your earnings power. It would be best if you carried enough life insurance. To ensure their financial security in the event of your untimely death.
Disability insurance. Finally, as long as you or anyone else depends on your earnings, ensure you have coverage. In the event you become incapable of carrying out your work duties.
Okay. That completes the insurance topic. Next up, investing in your 50s…
9. Invest With An Eye On Risk Versus Reward
Knowing how to invest in your 50s can be tricky. Because you still want to achieve solid investment returns.
But you can’t take risks as you did in your 20s and 30s because you don’t have the time left to recover from poor investment performance.
Here’s what to do…
Check Your Asset Allocation For Building Wealth After 50
Most financial advisors will suggest that, for those in their 50s, no more than 60% of their assets should be allocated to stocks in the stock market.
The other 40% should be allocated to bonds, alternative investments, and your cash emergency fund.
Diversify & Keep Investment Costs Low
With an appropriate asset allocation in place. Then, make sure no one investment consumes too much of one of your asset classifications.
Just go by the old saying. “Don’t put all your eggs in one basket.”
Finally, keep investment costs low. Individual stocks and exchange-traded funds are great options to achieve this goal.
Invest Outside Of Retirement Accounts When Building Wealth After 50
Investing for retirement in your 50s means this. Getting outside the comfort of employer-sponsored accounts.
So, open and invest in a taxable brokerage account.
Here are a few things to think about when it comes to investing at 50…
Best Investments In Your 50s
I think the best investments at this stage in life have two traits: they provide income and generate growth in the form of capital gains.
Blue-chip stocks to buy and hold.
Dividend stocks. They are my favorite investments for growth and income.
Great resource – Investing may seem complicated, but it doesn’t have to be. For example, I learned a ton from the Financial Freedom Dividend Investing Course offered by Simply Investing.
The course focuses on building a stream of passive income from dividends. Dividends are an excellent way to supplement income before and during retirement.
You can learn more about Simply Investing here.
Real Estate. We have already discussed real estate investments. But not everyone (myself included) is comfortable holding more than one physical property, typically a primary residence.
That’s where real estate crowdfunding platforms come in, where you can access high-quality real estate investments without the responsibility of physical ownership.
Okay. That wraps up investing at age 50. Next, I have one last topic about building wealth after 50 to cover…
10. Monitor Progress & Adjust As You Go
It should go without saying, but I will say it anyway: Knowing how to get rich after 50 means monitoring your progress.
So, plan to review your progress at least once a year. Twice a year is even better.
Go through today’s checklist of wealth-building tips after 50. And make sure nothing has fallen out of place. Or diverging from your plan.
That’s it for today. Start performing these tasks and be on your way to financial freedom.
Now, It’s time to wrap up with a summary…
Building Wealth After 50: 10 Tips For Success
Here’s exactly how to become wealthy in your 50s:
- Create a financial plan (or update your old one)
- Develop additional income sources
- Downsize your housing
- Keep college expenses in check
- Live below your means
- Manage debt wisely
- Be smart with your retirement savings
- Make the right decisions about insurance
- Invest your money wisely
- Monitor progress & adjust as you go
Now, it’s time to get busy building personal wealth. Think positively about money; maybe you will become a millionaire by 60.
More Reading About How To Build Wealth In Your 50s
Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.