The years leading up to retirement are critical for making smart, strategic decisions. Here is what to prioritize.
Preparing for Retirement: What to Focus on in Your 50s and 60s
Retirement may feel like a distant goal in your younger years, but once you hit your 50s and 60s, it becomes more real and more urgent. These are the decades when your retirement plans need to shift from theory to action. Here's what to prioritize:
1. Boost Your Savings
Your 50s and 60s are typically peak earning years. Take advantage of catch-up contributions to your 401(k) or IRA. In 2025, individuals over 50 can contribute an additional $7,500 to a 401(k). Maximize these opportunities to build a stronger nest egg.
2. Refine Your Budget and Expenses
Now’s the time to get realistic about your retirement lifestyle. Start tracking your spending and estimating what your expenses will look like in retirement. Think about housing, healthcare, travel, and daily living costs.
3. Pay Down Debt
Entering retirement with minimal debt (especially high-interest debt like credit cards) can significantly reduce your financial stress. Prioritize paying off car loans, personal loans, and ideally your mortgage.
4. Plan for Healthcare
Healthcare is one of the largest expenses in retirement. Consider long-term care insurance and understand how Medicare works, including what it covers (and doesn’t). Start factoring in healthcare costs into your retirement budget.
5. Evaluate Your Investment Strategy
As you get closer to retirement, consider shifting to a more conservative investment strategy to protect your savings from market volatility. But don’t get too conservative, your money still needs to grow to outpace inflation.
6. Know Your Social Security Strategy
Decide when to start claiming Social Security. Claiming early (as early as age 62) reduces your monthly benefit, while delaying up to age 70 increases it. The right strategy depends on your health, financial needs, and life expectancy.
7. Visualize Your Retirement Life
Retirement isn't just a financial transition; it’s a lifestyle change. Think about how you want to spend your time. Whether it's travel, hobbies, part-time work, or volunteering, having a purpose will make the experience more fulfilling.
Final Thoughts
The years leading up to retirement are critical for making smart, strategic decisions. With careful planning, your 50s and 60s can be the launchpad for a financially secure and rewarding retirement.