How to Start Saving for Retirement at 50

By Tom Burchnell
saving for retirement at 50

Wondering how to get ahead of retirement but have a late start towards your funds? Learn how to start saving for retirement at 50. 

Few life events link to as much planning, apprehension, and eagerness as retirement. People can spend their whole lives preparing for the moment, balancing the worry of future living expenses and medical expenses against the anticipation of trading work for relaxation and passion projects. 

For those who start saving for  a comfortable retirement at 50, these sentiments likely skew more towards worry—but they don’t have to.

Current retirement recommendations suggest that by 50, you should have four to six times your annual income saved away. Life isn’t always so straightforward, however. Understandably, immediate living expenses usually supersede those for the future as children’s education, medical, and other costs regularly compete with savings efforts.

If your retirement savings goal has not been your top financial priority thus far—intentionally or otherwise—it’s normal to harbor some concerns over your nest egg (if you’re asking yourself, what is a nest egg, learn more today). You may even wonder if 50 is too late to begin. Thankfully, it’s not, and adopting a few different financial strategies, including a home equity loan alternative that provides an effective path for how to start saving for retirement at 50.

How Much Should I Save for Retirement? The 80% and 4% Goals

Wondering how to save for retirement at 50? Regardless of when or how you start saving for your retirement fund, figures of 80% and 4% provide two recommended retirement goals to aim for. More specifically, these savings goals suggest:

  • 80% – Many advisors suggest a retirement fund that offers 80% of your yearly income. If you make $50,000 per year, aim for savings that provide $40,000 per year.
  • 4% – To calculate your total amount of retirement savings to aim for, divide your per-year goal by 4% (or .04). If you set a goal of $40,000 per year, you’ll want to target retirement savings that add up to $1,000,000.

The main advantages to adopting the 80% and 4% goals are that anyone can apply them regardless of their current income and lifestyle. One of the trickiest aspects of retirement planning is determining the amount to aim for, as different experts report different figures. 

These 80% and 4% goals help break down your savings efforts into more practical understandings of per-year targets when evaluating your retirement fund and retirement savings plan.

Most Americans Are a Bit Behind on Retirement Savings

Don’t let the 80% and 4% goals cause you worry if you feel a bit below the recommended retirement savings amounts upon reaching 50. You’re far from alone. Despite the reported figures, most Americans find themselves a little behind in their efforts, no matter their age.

Fidelity recommends that individuals save 15% of their gross income each year for their eventual retirement. However, a 2019 Charles Schwab survey focusing on 401(k) plans revealed that half of the respondents contribute 10% or less of their gross yearly income.

Despite the common financial concern over not having saved enough, you can choose from various strategies to reach your retirement goals and make up any amount you might feel stands between you and your ideal nest egg—even at 50. 

Most Common Retirement Accounts and Strategies

Choosing a strategy for your retirement plan upon reaching 50 still requires a basic understanding of the different types of accounts possibly available to you. Some of the most common (and best) retirement accounts include:

  • Individual Retirement Agreements (IRAs) – With traditional IRA accounts, your contributions may be tax-deductible (depending on your filing status), and you won’t be taxed on the saved income or any earnings the account makes until making withdrawals.
  • Roth IRA – Introduced as part of the Taxpayer Relief Act of 1997, Roth IRAs primarily operate the same as traditional IRA accounts, except that you pay the assessed taxes when you make contributions rather than upon withdrawing funds. The differences between Roth IRAs and their traditional predecessors include:
  • You cannot deduct Roth IRA contributions on your taxes.
  • Your withdrawals that meet the IRS’ qualifications are tax-free (consult the IRS’ information regarding Roth IRAs for a complete list of withdrawal qualifications).
  • You can still contribute to a Roth IRA account after reaching 70 years and six months of age.
  • You may leave funds in your Roth IRA as long as you live.
  • You must explicitly designate your Roth IRA account as such upon its creation.
  • SIMPLE IRA – Designed for small businesses of 100 or fewer employees, SIMPLE (Savings Incentive Match PLan for Employees) IRAs require employer contributions to meet one of two criteria:
  • A matching contribution of up to 3% of your yearly income (not limited by any annual compensation limits)
  • A non-elective contribution fixed at 2% of your yearly income (with which your employer will make contributions regardless of whether you do)
  • 401(k) – The IRS defines 401(k)s as a profit-sharing plan, allowing employees to set aside a portion of their wages as contributions to individual retirement accounts. Notable characteristics of a 401(k) plan include:
  • Your contributions (i.e., “elective salary deferrals”) are excluded from your taxable income.
  • Your employer can contribute to your 401(k) plans, referred to as “matching” your contribution (typically done according to a fixed percentage and/or up to a fixed amount per year).
  • Your post-retirement withdrawals count as taxable income.
  • SIMPLE 401(k) – This SIMPLE iteration is a subset of traditional 401(k) plans designed for small businesses of 100 or fewer employees, much like the SIMPLE IRA is to traditional or Roth IRAs. The primary difference between SIMPLE and regular 401(k) plans is that your employer must make one of the following:
  • A matching contribution of up to 3% of your yearly income
  • A non-elective contribution fixed at 2% of your yearly income
  • 403(b) – A 403(b) retirement plan is considered a tax-sheltered annuity plan (TSA) that serves as the 401(k) alternative for employees of public schools or certain charities and non-profit organizations.

The 4 Best Strategies to Start Saving at 50 for Your Retirement

If you wake up on the morning of your 50th birthday without enough confidence in your current nest egg, what are the best ways to save for retirement at 50?

.1 Review Your Budget and Make Adjustments to Find Savings

Any individual can perform the most accessible financial activity regardless of their age or savings goals: reviewing your current budget. Do you have any unnecessary and easily cut expenses? AARP suggests looking at your monthly food budget, in particular.

2. Set Up Automated Savings Deposits in Case of Life Distractions 

Once you’ve assessed your budget, determine how much of your income to save each month. With that figure in mind, set up an automatic deposit into a savings account each month. Not everyone remembers to sit down and initiate a savings deposit, so automatic schedules ensure that your efforts continue—even if you end up distracted from making a new transfer following each paycheck or two.

3. Pay Down Any Debts Now to Save for Later

Making payments on your debt principals and their interest will detract from your savings efforts over time. Your long-remaining debt equates to more income you will have to throw at recurring interest charges instead of your retirement savings.

4. Maximize Your (and Your Employer’s) Contributions to a Retirement Plan

If you don’t already have one set up, ask your employer about any retirement plans they’ve made available to you. Your employer likely offers at least one of the typical retirement accounts explained above.

When setting up or adjusting these plans, try to maximize as much of your own contribution as possible (depending on your income needs as determined by your budget review). In addition, maximizing your contribution will do the same to your employer’s if they offer any amount of matching.

Upon reaching certain ages—of which 50 is one—different retirement plans begin allowing increased contributions. For example, 401(k) contributions in 2020 and 2021 have been limited to $19,500, but individuals aged 50 or older may make additional “catch-up” contributions up to $6,500 more for a total of $26,000.

Evaluate Your Saved Assets, Such as Your Home

Most individuals accrue savings in some non-cash assets by the time they reach 50, the most significant of which likely consists of their house. Upon purchasing a home, the difference between your property’s value and your mortgage balance represents the amount added to your pocket upon completion of a sale.

This value is referred to as your “home equity.” Since you continually pay down your mortgage over time, your equity grows the longer you reside in your house. However, accessing your home equity to help you save for retirement is not without challenges:

  • You cannot withdraw funds directly from your home equity.
  • Home equity loans require placing your house as collateral to secure the loan, which means failure to make the agreed-upon payments may result in losing it.
  • Home equity loans typically follow 15-year terms, which bring you much closer to retirement, along with the cost of associated interest payments.

With several pros and cons of home equity loans to consider, you might be wondering if there are alternative ways to get equity out of your home.

Your Retirement Solution for Any Age

As compared to the challenges of traditional home equity loans, sale-leaseback programs provide a financial solution that allows homeowners to sell their home and stay as a renter. How this works – you sell your home and get to lease it back. This solution unlocks the total amount of your home equity, which can be used to contribute towards retirement savings. At 50 or any other age, a sale-leaseback program can provide a path to immediately boost your retirement savings.

Whereas a home equity loan adds debt and interest (along with the risk of losing your home), a sale-leaseback solution can put your cash in your hands with a home equity investment—for your retirement or any other needs that life tosses your way.

Key Takeaways

For those who start saving for a comfortable retirement at 50, these sentiments likely skew more towards worry—but they don’t have to. If you are still unsure of alternative options to reach your financial goals after retirement, after reading this article, consult a financial advisor to discuss your options.


  1. AARP. 7 Steps to Start Saving for Retirement After 50.
  2. Charles Schwab. 2019 401(k) Participant Survey.
  3. CNBC. Here’s how much Americans in their 50s have in their 401(k)s.
  4. Fidelity. 4 rules of thumb for retirement savings.
  5. Investopedia. 401(k) Contribution Limits for 2020 vs. 2021.
  6. Investopedia. How Much Do I Need to Retire?
  7. IRS. 401(k) Plan.
  8. IRS. Choosing a Retirement Plan: SIMPLE 401(k) Plan.
  9. IRS. Publication 590-B (2020), Distributions from Individual Retirement Agreements (IRAs).
  10. IRS. Roth IRAs.
  11. IRS. SIMPLE IRA Plan.
Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.