How to Plan for Retirement in Your 50s

Age 50 marks the beginning of a defining decade for individuals saving and planning for retirement; the transition from building retirement assets to refining how those assets will support life after work. During this period, retirement is close enough for more concrete estimates of spending, income, taxes, and healthcare, with several working years remaining to make adjustments.

This decade calls for coordination. It’s a time to stress-test the retirement income plan, reassess investment risk, evaluate Social Security timing, develop a tax-conscious withdrawal strategy, prepare for healthcare expenses, and review estate documents. Each decision affects others, so evaluating them together can provide a clearer picture of retirement readiness and reveal opportunities before employment income ends. Finally, a few important developments occur during one’s fifties that can improve their retirement outlook.

Take Advantage of New Opportunities After Age 50

Turning 50 creates additional opportunities to direct money toward retirement. In 2026, employees aged 50 and older can make an $8,000 catch-up contribution to most 401(k), 403(b), and governmental 457 plans, in addition to the regular $24,500 employee contribution limit. That brings the total potential contribution to $32,500. In addition, employees with at least 15 years of service may qualify for the special 403(b) catch-up provision, which may allow additional contributions beyond the standard catch-up limits. The IRA catch-up contribution is $1,100 in 2026.

Lastly, as individuals approach the finish line of their 50s, an enhanced catch-up contribution opportunity can provide a meaningful boost to retirement savings and help strengthen retirement readiness. Under current rules, individuals ages 60 through 63 are eligible for a “super catch-up” contribution to employer-sponsored retirement plans that allow catch-up contributions. In 2026, eligible participants can make catch-up contributions of up to $11,250, above and beyond the standard elective deferral limits.

Higher earners should also consider a change that took effect in 2026. Workers who earned more than $150,000 in wages from the employer sponsoring their retirement plan in the previous year must generally make catch-up contributions to that employer’s plan on a Roth basis. Because Roth contributions do not provide an upfront tax deduction, this requirement can affect current tax planning and the mix of pre-tax and Roth assets available in retirement.

Other opportunities arise later in the decade. At age 55, eligible individuals can contribute an additional $1,000 to a health savings account (HSA), over the 2026 limits of $4,400 for self-only coverage and $8,750 for family coverage. Those who pay current medical expenses from other sources can accumulate tax-advantaged HSA funds for healthcare costs in retirement. It is also important to retain receipts for qualified medical expenses paid out of pocket after the HSA has been established, as those expenses can be reimbursed at any time in the future with no statutory time limit. This strategy can provide valuable access to tax-free withdrawals when needed and may be especially beneficial for retirees who must carefully manage their income sources and tax obligations.

At age 59½, individuals can generally begin taking distributions from Traditional IRA and employer-sponsored retirement accounts without incurring the 10% early withdrawal penalty. This flexibility can be particularly valuable for those considering retirement before reaching traditional retirement age. Additionally, former employer-sponsored retirement plans, such as 401(k)s, may offer earlier access under the “Rule of 55,” which allows penalty-free withdrawals for individuals who separate from service during or after the year they turn 55. Understanding these provisions can expand retirement income planning options and provide greater flexibility when evaluating an early retirement strategy.

Stress-Test Retirement Income

By age 50, individuals should be able to estimate retirement spending, identify expected income from Social Security, pensions, and other sources, and calculate how much their investments will need to provide. 

The projection should also test less favorable conditions with questions like the following in mind.

• What happens if retirement begins two years early?
• How could prolonged inflation or a market decline near retirement affect withdrawals?
• What level of discretionary spending could change without undermining core expenses?

Running multiple scenarios helps determine whether accumulated savings can support the intended lifestyle under different economic conditions. It can also expose areas of opportunity, leaving time for adjustment while there is still time to act. For example, an individual may realize they need to save more during peak earning years or change their projected retirement date.

Reassess Investment Risk

Investment priorities change with age and circumstances as the first portfolio withdrawal gets closer. During their 50s, individuals should regularly review their asset allocation, concentrated positions, investment costs, and the amount of near-term retirement spending exposed to market volatility.

The results of this review should reflect both near-term income needs and long-term growth objectives. A retirement may last 25 or 30 years, leaving a long investment horizon for a portion of the portfolio. Individuals can align investments with when they will need the money, recognizing that funds intended for earlier retirement years may warrant different risk characteristics than assets designated for spending decades later.

Model Social Security as Part of Retirement Income

The decade leading up to retirement is ideal for modeling Social Security benefits alongside portfolio withdrawals, pensions, and other anticipated income to understand how different claiming ages could affect their retirement strategy. Benefits can begin as early as age 62, while delaying benefits can increase monthly income, so projections should account for several potential claiming dates. The analysis can also consider longevity, marital circumstances, survivor benefits, and available assets to determine how Social Security may fit into the broader income plan.

Develop a Tax-Conscious Withdrawal Strategy

It’s not uncommon for individuals to enter retirement with assets spread across traditional retirement accounts, Roth accounts, taxable investments, and cash, each with different tax treatment. Determining how and when to draw from these accounts—considering Roth conversions, capital gains, future required minimum distributions, and the taxation of Social Security benefits—can position portfolios for better tax outcomes in retirement.

Planning should also account for how an individual’s tax situation may change after leaving the workforce. For example, the years between retirement and the start of required minimum distributions (RMDs) may provide opportunities to convert portions of a traditional IRA to a Roth IRA at potentially lower tax rates. Decisions about realizing capital gains or drawing from taxable and tax-deferred accounts can also affect taxable income and, later, Medicare premiums. Looking several years ahead can help individuals identify when different tax strategies may be most advantageous.

Refine Healthcare Costs

Healthcare warrants a distinct place in retirement projections. Fidelity estimates that a 65-year-old retiring in 2026 could spend an average of $185,500 on healthcare and medical expenses throughout retirement, excluding long-term care. Individuals in their 50s should account for Medicare and supplemental coverage, out-of-pocket expenses, potential long-term care costs, and, for those retiring before Medicare eligibility at 65, the cost of interim health insurance.

Review the Estate Plan Before Retirement

Estate planning should evolve as family circumstances, finances, and retirement goals change. The 50s provide an opportunity to review wills, trusts where appropriate, powers of attorney, healthcare directives, and beneficiary designations. It is also a useful time to evaluate life insurance needs. Those who expect coverage to play a role in their retirement or legacy strategy may benefit from exploring options before age or changes in health make coverage more expensive or difficult to obtain.

Coordinate Retirement Planning With SHP Financial

With retirement on the horizon, it’s important for years of preparation to work as a unified strategy. At SHP Financial, we specialize in the five worlds of retirement planning: income, investments, taxes, healthcare, and legacy planning. Through our SHP Retirement Road Map®, we help clients connect decisions across these areas, identify opportunities for refinement, and prepare for the transition from accumulating wealth to using it to support their retirement lifestyle. Contact SHP Financial for a complimentary review of your finances today and learn how we can help position your plan for the years ahead.