Retirement planning in your 50s: four smart moves to make

In your 50s, it’s essential to make retirement planning a priority.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While it’s possible to get away with not prioritising retirement planning in your 30s and 40s, it’s a different story in your 50s. All of a sudden, retirement is right around the corner, meaning it’s crucial to give your retirement finances some serious thought. With that in mind, here’s a look at four fundamental retirement planning moves to make in your 50s.

Do the calculations

One of the most important things to do in your 50s, if you haven’t done it already, is work out how much money you need to retire. This is not particularly straightforward as there are many variables to consider including your life expectancy, your retirement income requirements, expected investment returns, tax rates, and whether you qualify for the State Pension. Retirement calculators can be useful to a degree here, however, be aware that they tend to be based on assumptions. As such, it could be sensible to speak to an expert if you’re looking for tailored advice.

Once you have determined how much money you’ll need to retire, you can then analyse whether you’re on track to achieve your goals. You can do this by looking at how much money you have saved for retirement now, and projecting this into the future.

Boost your savings

At this stage of the process, many people realise that their savings are a little on the low side. For example, a recent study by SunLife found that those aged 55 and over in the UK felt they needed an extra £184,484 on top of their current retirement savings to retire comfortably. That’s a worrying statistic. However, if you’re in this position, don’t despair. There’s still time to boost your savings.

One of the best ways to save for retirement is to save money in a Self-Invested Personal Pension (SIPP) account. The advantage of this type of account is that your contributions will be topped up by the government. For example, if you’re a basic-rate taxpayer and you contribute £800 into a SIPP, the government will add in another £200 for you. Saving into a Stocks and Shares ISA is another good option. With this type of account, all your capital gains and income generated will be tax free.

Pay down debt

It also makes sense to pay down as much debt as possible in your 50s. This includes mortgage debt and credit card debt. You don’t want to be carrying this into retirement. If you can pay this off early on, it could help you boost your pension savings. According to research from Hargreaves Lansdown, paying off your mortgage at age 50 and redirecting the average monthly mortgage payment of £633 into a pension could potentially provide an extra £218,548 in retirement.

Optimise your asset allocation

In your 50s, it’s also essential to make sure that your asset allocation is suitable for your risk tolerance. With retirement not far off, you don’t want to be taking large risks with your money. However, at the same time, holding all your money in cash savings probably isn’t the best idea either as you want your money to grow faster than inflation. Again, if you’re unsure about this, it could be sensible to speak to an expert.

Finally, don’t forget to review your progress regularly. The more often you do this, the more in control of the situation you’ll feel.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Retirement Articles

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »

Investing Articles

How I’d invest within a SIPP to target a 7% dividend yield

Zaven Boyrazian explains the steps he’d take to target a high-yield, income-generating SIPP for 2024 and beyond by investing in…

Read more »

Investing Articles

No pension at 50? Here’s my SIPP investment plan to target £16k a year in passive income!

With disciplined saving, a solid investment plan and the tax benefits of a SIPP, it’s possible to turbocharge pension growth…

Read more »

Young woman holding up three fingers
Investing Articles

These 3 investing steps could make me an £11,680 passive income!

If I was starting out on my investing journey, here's how I'd try to build a robust passive income with…

Read more »

The words "what's your plan for retirement" written on chalkboard on pavement somewhere in London
Investing Articles

Small SIPP at 55? I’d take these steps to boost my retirement savings

With a consistent savings plan, sound strategy, and some wonderful tax relief in a SIPP, it’s possible to massively grow…

Read more »

Investing Articles

Value, growth and dividends! 3 ETFs I’d buy in a Stocks and Shares ISA

Royston Wild believes these UK-listed exchange-traded funds (ETFs) could help him create a winning Stocks and Shares ISA.

Read more »

Investing Articles

How I’d pick dividend stocks to retire with a second income using my £20k ISA allowance

Our writer details his strategy to build a second income stream before retirement by investing in dividend stocks with the…

Read more »

A senior group of friends enjoying rowing on the River Derwent
Investing Articles

How I’d invest £100,000 in a SIPP to build long-term retirement wealth

There are multiple ways to build wealth in a SIPP. Zaven Boyrazian explores different methods to help identify which is…

Read more »