Grow your savings.
The decade leading up to retirement is your last chance to build a significant nest egg. The decisions you make now will impact the retirement benefits you receive and how much you will be able to safely spend for the rest of your life. Here's how to improve your retirement finances in your 50s.
Become a super saver.
An empty nest gives you an opportunity to fill up your nest egg. Once you're done paying for child care and college tuition, it frees up income to tuck into retirement accounts and invest for retirement. Redirect as much cash as you can, including raises, tax refunds and bonuses, to retirement savings.
Eliminate your mortgage.
Paying off your mortgage effectively eliminates one of your biggest monthly bills. While you will still have insurance and maintenance costs, your expenses will decline significantly if you own a paid-off house. You will also be able to get by with less savings in retirement because you won't need to make a housing payment.
Pay off debt.
If you're making payments on your car, student loans or especially high-interest credit card debt, make it a priority to pay it off before retirement. It will be much easier to pay for retirement if you're not stuck with expenses you incurred while working.
Downsize your life.
Re-evaluate whether you still need a several-bedroom house with a large yard. A smaller space is likely to be easier to heat, cool and maintain. While it can be difficult to leave behind the memories you created in your family home, moving could significantly reduce your housing costs and free up home equity to put toward retirement.
Maximize your tax breaks.
Many people in their 50s are in their peak earning years, which could mean you are in a higher tax bracket than you will be during retirement. To minimize your tax bill, take advantage of as many tax breaks as possible, including deductions for saving for retirement and health care accounts if you qualify.
Once you hit age 50, the 401(k) contribution limit jumps by $6,000 to $24,000. Older workers can also contribute $1,000 more to an IRA than people under 50 for a total of $6,500. Taking advantage of these tax deductions for retirement account contributions could save you thousands of dollars on your current tax bill.
Avoid gaps in health insurance.
Health problems are increasingly likely after 50, but you won't qualify for Medicare until age 65. In addition to maintaining your health, make sure you are adequately insured for any potential problems. Getting sick is bad enough -- don't let a large medical bill ruin your retirement finances.
Make a Social Security plan.
While you can't sign up for Social Security until you hit age 62, it's a good idea to start planning when and how you will claim your benefit long before you need it. Signing up at 62 will result in a reduced benefit, while delaying your benefit up until age 70 will increase your monthly payments. There is some room to strategize to maximize payments over your lifetime.
Insulate your career.
Job loss during your 50s can be devastating, and many laid off older workers aren't able to find another job with similar pay or status. Take steps to make yourself indispensable to the company, and make sure you stay up to date with current technology and new developments in your industry.
Plan your exit.
While you don't always get to pick the date when you leave your job, your 50s is a good time to start dreaming about retirement. In addition to motiving you to save, brainstorming how you will spend your time can help the transition into retirement go more smoothly.