Retirement Planning Essentials in Your 40s and 50s

Retirement Planning Essentials in Your 40s and 50s

June 4, 2021

Are You On Track for Retirement?

Something about celebrating birthdays in your 40s and 50s makes retirement come into focus just a little bit more. You’re at the point in life where you may still have more working years ahead of you than behind, but can actually begin to see the finish line getting closer and closer. It’s a good time to make sure you’re still on track for retirement (or get back on track after this last year!)

Here are several suggestions for retirement planning as you venture into your 40s and 50s.


Tip 1: Begin planning how much income you’ll want and need. How much money exactly will you need – and want – each year in retirement? Many people don’t change their spending habits during retirement, and some actually increase spending due to travelling or medical expenses. You need to begin thinking about how much money – exactly – you’ll want and need in retirement. Strive for 100% of pre-retirement income.

Tip 2: Focus on health risk management. Health care costs may be your biggest expense in retirement. Remember that Medicare will cover approximately 60% to 80% of your health care costs, and maybe even less. So get a good supplemental policy, live a healthy lifestyle, and consider long term care insurance.

Save your seat for our complimentary webinar, “Retirement Planning Essentials in Your 40s and 50s.” We’ll expand on topics discussed in this article on Thursday, July 1 @ 11am MT!

Register now.

Tip 3: Contribute to a Health Savings Accounts (HSA). HSAs offer a triple tax advantage – contributions to an HSA use pre-tax dollars, earnings in an HSA can grow tax-free, and distributions used to pay for qualified medical expenses are also tax free. You can also use money in an HSA to pay for non-medical expenses after you turn age 65, although you’ll have to pay income tax (but no penalty!) on the money you spend.

Tip 4: Retirement planning is all about mitigating risks. There are multiple potential risks that you should be mindful of as you plan for retirement. Here are some of the most common types of risk and what you can do:

  • Entitlement risk – That government programs such as Social Security and Medicare will not offer sufficient resources.
    • How to plan: Increase personal savings and investments. Consider supplementing government programs with other income sources.
  • Market risk – Losing invested wealth either temporarily or permanently.
    • How to plan: Have a proper asset allocation and diversification for your retirement portfolio.
  • Lifestyle risk – That there is not sufficient income to maintain your desired standard of living.
    • How to plan: Be disciplined with saving enough money for retirement, along with proper budgeting.
  • Asset allocation risk – Investing not according to your risk tolerance and not diversifying.
    • How to plan: Consult an experienced, knowledgeable investment advisor.
  • Sequence of return risk – Receiving low or negative returns during the early years of retirement, which ultimately leads to outliving your money.
    • How to plan: Consider alternative sources of retirement funds.
  • Inflation Risk – That rising costs will undermine purchasing power.
    • How to plan: Manage this risk with inflation hedging investments in your portfolio.
  • Tax risk – Rising taxes or unforeseen tax consequences.
    • How to plan: Consult a tax advisor before retirement. Consider using tax-deferred and tax-efficient investment solutions.


Reminder #1: Get rid of your debt! Carrying any amount of debt into retirement will eat away at the amount of money you can use to enjoy a relaxing retirement. If you still have debt in your 40s and 50s, focus on getting rid of it as quickly as possible.

Reminder #2: Continue to maximize your income. Try to continue increasing your earning power year-after-year. If you’re an employee, talk with your supervisor about new skills that could make you more valuable at work or potential promotion opportunities if you’d like to move into management. If you own a business, continue growing your business while delegating as much of the day-to-day operations as possible to employees.

Reminder #3: Don’t worry if you’re behind on savings! Not many people execute a perfect life plan starting in their 20s and extending through their 70s and 80s. So if the amount of money you’ve saved so far for retirement is below average (or even near zero!), the best day to start planning for retirement is today!

After paying off your debt and continuing to increase your net worth, you’ll be in a great position to invest a good chunk of your income and have the flexibility to pursue other opportunities that may help you to continue increasing your annual income.

Your 40s and 50s is the time to ramp up your savings and investments and begin planning for the many risks that you’ll need to navigate during retirement. If you have any questions about planning for retirement and saving money in your 40s and 50s, please contact Paul Madrid, REDW Wealth Principal and Practice Leader.

Focus first on essentials, then luxury items…

Retirement Planning Essentials in Your 40s and 50s – Are You on Track for Retirement?

In this complimentary webinar aimed at mid-career employees, REDW Wealth Principal Paul Madrid will walk you through the pivotal planning steps necessary to reach your retirement goals at this stage of the game. In the process, he will:

· Debunk popular retirement myths and misconceptions
· Educate you on retirement risks and possible solutions
· Offer important considerations for older participants who are preparing for retirement

This is a talk you won’t want to miss!

Thursday, July 1 @ 11 am MT

Register Now!

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