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How to Catch Up on Retirement Savings in Your 50s

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Data is increasingly showing that many Americans, even those in their 50s, have saved little for their retirement.

According to research by the nonprofit Economic Policy Institute, among households headed by adults ages 50 to 55, the median retirement savings is only $8,000, according to the Economic Policy Institute.

Lack of retirement funds is all the more concerning as today’s adults are expected to live much longer. In 1940, the life expectancy of a 65 year old was almost 14 years. Today it is just over 20 years.

Supplemental income like Social Security may not be enough to cover anything beyond basic needs, especially if retirees need extensive health care as they age. The average monthly Social Security benefit is $1,369, for an annual haul of $16,428 — that’s peanuts compared with the $46,000 that the average 65 year old spends in a given year.

For 50-somethings who are swiftly approaching retirement but feel as if they haven’t yet saved enough, it can be overwhelming. The good news is that you still have some time to catch up.

Here are seven ways to boost your savings and cut back on expenses.

Use a retirement calculator to set savings goals

Even though it’s late in the game, it’s important to get an idea of how much you need to save in order to have the type of retirement that you envision.

Organizations from the American Association of Retired Persons to insurance company Voya sponsor retirement calculators, which can project your individual financial goals and show you what it will take to reach those goals, even when you are late to the process. David Skid, executive director and financial adviser of Vantage Wealth Management at Morgan Stanley in Atlanta, suggests using a variety of retirement calculators, and comparing to make sure you get consistent results.

Retirement calculators will ask you to input several pieces of data, including your age, annual salary, how much you have saved for retirement so far and any pension you expect to receive, as well as this data for a spouse.

Retirement calculators will also often ask about your spending plans during retirement. For example, if you plan to travel or spend more on hobbies or dining out, calculators will take this factor into account when projecting how much you should save.

Take advantage of catch-up contributions

One good thing about turning 50 is an additional savings opportunity for your 401(k) and IRA accounts.

For eligible workers under the age of 50, the maximum contribution limit to a 401(k) is $18,500, up from $18,000 in 2017, and to an IRA is $5,000.

But catch-up contributions allow eligible workers 50 and over to save more, which are called “catch-up contributions”. This boosts those total contribution limits to $24,500 and $6,500, respectively.

“The government gives the ability to turbocharge or jump-start [retirement savings] for investors that are getting a later start,” Skid said.

Don’t use your 401(k) like a piggy bank

It might be tempting when facing large costs such as college tuition to dip into your 401(k), but it’s best to not touch the account. All 401(k) withdrawals are subject to your ordinary income tax rate, and it’s likely you will pay more to take out money now rather than in your retirement years because you currently are earning more and therefore placed in a higher tax bracket.

Also, 401(k) accounts only allow for one loan at a time and loans must be paid back in five years, meaning you would have to take out all of the college tuition you would need in one withdrawal and pay back four years’ worth of costs in only five years.

If your child is vying to go to an expensive school and you’re tempted to use your nest egg to fund their way, think of this before you dip: College students have access to low-cost, flexible federal student loans and decades ahead of them to repay their debt. No one is going to issue a 50-something a low-rate loan to fund their retirement.

To save your child from the financial burden of paying for your retirement later in life, you might need to have a different conversation about paying for college on their own or taking out student loans. And it’s not only for your benefit — it’s for theirs, too.

“If we don’t save for our own retirement, then when we become older, we are going to have to be reliant on somebody else to financially support us when we are no longer able to work or face potential health challenges,” Skid said.

Enroll in employer match programs

When you are saving with a 401(k), some employers will match a percentage of the contribution you make to your account.

For example, your employer could match your contributions 100% up to 6% of your income. This means if you earn $100,000 and you place 6% into your 401(k), or $6,000, and your employer will add $6,000. If you add 8% of your income, or $8,000, your employer would still match you at 6%.

Not every employer offers a match and even when they do, the match they offer can be different. It is important for you to ask your company’s HR or similar representative to find out if this opportunity exists and how to take advantage of it.

If you haven’t taken advantage of this program or if your employer is just starting to implement matches, it’s worth your time to investigate. Employer matches are like free money to add to your retirement savings account.

“It’s important for all of us to make sure in our jobs what sort of match we might have available to us and contributing at least as much money as we can to get that free money from our employers,” said Skid, who also is a chartered financial analyst (CFA) and certified financial planner (CFP).

Also, if your employer’s 401(k) plans offer financial advice, take up the offer. A 2014 study by Financial Engines and Aon Hewitt found that 401(k) participants who received professional investment help in the form of managed accounts, target-date funds or online advice, earned higher median annual returns than others who invested on their own.

The study found that if two employees both invested $10,000 at age 45, one with advice and one without, the one who received advice could have 79% more wealth at age 65 than the employee without advice.

Add more income streams

Accelerate your savings by adding to your workload during the last few years until you retire or delaying your retirement if you are still healthy and able.

Add a part-time job or pick up an extra project at work to increase your monthly cash flow, some of which can be saved for retirement. Likewise, if you continue to work past 62, you can keep employer benefits, such as health insurance, and increase your time to add money to employer-sponsored retirement plans.

“If you are starting savings later in life, you might have to have a paradigm shift of when your retirement is going to start,” Skid said.

Automate your savings

Set your checking account to put aside money once a month into your investment account, instead of relying on yourself to manually do it, Skid says. You will be less likely to forget or bend to other expenses. Consider it your own personal payroll deduction plan.

Typically, most financial advisers suggest putting aside 10% to 15% of your income into a retirement account each year throughout your life. At this rate, financial services company Fidelity estimates that you should have about six times your salary saved up if you started saving at age 25 and planned to retire at age 67.

However, if you have delayed savings, a 2014 report from the Center for Retirement Research at Boston College found that in your 50s, you might have to boost the percentage of your income going to your account to almost 29% to reach a savings amount that is enough to live off.

Pay off debt aggressively

If you have enough cash on hand, Skid said accelerating your mortgage payments or paying down other consumer debt is another good way to prepare for retirement if you are late in the savings game.

Speeding up your mortgage payments would ease the burden of debt from the mortgage during retirement, when you would have less income to pay off the mortgage.

Because cash is earning you less than your mortgage is costing you, paying off your mortgage with that money will help set you up for a less costly retirement.

The same goes for high-interest credit card debt. You should still sock away at least enough in your 401(k) to capture any employer match, but then throw everything you’ve got toward tackling high-interest credit debt. Conservatively, you might earn 7% a year in annual stock market returns, while credit card debt can easily carry interest rates of 16% or higher.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lindsey Conway
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Lindsey Conway is a writer at MagnifyMoney. You can email Lindsey here

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Study: Millennials Depend on the Bank of Mom and Dad

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Millennials are advancing steadily into middle age. But statistically speaking, America’s largest generation retains one characteristic of their youth: Widespread dependence on their parents to help pay the bills.

A new survey reveals that even millennials who think of themselves as independent on money matters still hit up their parents for regular, recurring expenses. Of those surveyed, 54% claimed they stood on their own two feet, but when pressed a further 30% of those admitted to leaning on their parents to help cover costs on everything from groceries to car insurance.

The costs being covered by parents

For the most part, millennials aren’t hitting up their parents for cash to cover extravagant, one-off charges like airfare for an Instagram-worthy vacation. Instead, the survey found millennials ask mom and dad for help making ends meet for living expenses, such as the phone bill, food and rent. For example, of the millennials who receive monthly help from their parents, 48% of respondents say the money helps cover the phone bill. A more detailed breakdown can be seen in the graph below:


Besides these day-to-day costs, emergency spending requires a call home for some millennials. About 15% of all survey respondents said they would need help from their parents to cover a sudden $1,000 expense. Instead, most would opt to use either cash or savings, provided those savings weren’t earmarked for retirement in a tax-advantaged account.

Millennial money worries

Dipping into your emergency fund to repair a hole in the ceiling is a good strategy (and a reason why you save), while making a withdrawal from your savings account to pay for a bottle of rosé is not. Unfortunately a staggering 70% of millennials surveyed admitted to using savings to cover non-emergency expenses.


To use a favorite phrase of millennials, “this is problematic.” A savings account can only be drawn upon six times a month via debit card or check (due to federal regulations) and you don’t want to waste one of your six free withdrawals to pay for a pint of Americone Dream. Even worse, the money spent on non-emergency expenses won’t be there when you need it to pay for an unexpected, urgent cost.

Another metric of financial health where millennials could stand to improve is retirement savings. While 58% of the millennials surveyed claimed to save money with either each paycheck or once a month, 44% don’t have any sort of retirement savings account — either a private one or through work.


To be fair, millennials aren’t exactly celebrating these personal finance failures. Approximately 57% said they regretted how they’ve spent money from their savings account, and a little over 36% said that during the past week, they felt anxiety about their finances every single day.

The numbers behind the stress

A significant financial worry on millennials’ minds is not having enough money. While we’re pretty sure everyone, regardless of age, would like to have more money, a recent study by the Federal Reserve underscores that millennials are particularly hard-strapped for cash.

Titled “Are Millennials Different?”, the report found when compared to members of Generation X and Baby Boomers when they were roughly the same age as today’s millennials, the millennials have less means to deal with their financial challenges.

As the authors of the report put it in the conclusion of the report, “We showed that millennials do have lower real incomes than members of earlier generations when they were at similar ages, and millennials also appear to have accumulated fewer assets. The comparisons for debt are somewhat mixed, but it seems fair to conclude that millennials have levels of real debt that are about the same as those of members of Generation X when they were young and more than those of the baby boomers.”

How can millennials do better?

Besides winning the lottery, what else can millennials do to improve their financial situation and rely less on their parents?

“Many millennials are skeptical of the market,” said Dallen Haws, a financial planner based in Arizona. “Although it’s good that they are not investing willy-nilly, it will be very important that they get comfortable with investing to be able to reach their full financial potential.” Read more on how millennials (and everyone else) can start investing with an eye toward retirement.

Millennials should also embrace the power of austerity. That doesn’t mean living like a monk, but it does mean thinking twice (or thrice) about making big-ticket purchases and whether or not they are affordable.

“Without question, the biggest regret amongst millennials I work with is overpaying for a car,” said Rick Vazza, a CFA/CFP based in San Diego. “Some of my most successful young members have happily continued holding on to inexpensive cars allowing them to funnel more money toward travel, retirement funds or a down payment.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
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7 Ways to Cool Down Summer Spending

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Summer is here and that means a few different things: battles with kids over sunscreen application, increased outdoor activities and a strained bank account. According to a 2018 study from LendEDU, the average adult American spends $2,229 during the summer, making it the second-most expensive season behind winter.

After being stuck inside your house for most of the colder months, it’s only natural to get excited about the outdoors and going on vacation. Unfortunately, leaving the comfort of your couch increases your expenses. Here are some tips to help you navigate the hotter months of the year without breaking a sweat.

Manage vacation expectations

One of the best ways to be able to afford a summer vacation is to work it into your yearly budget ahead of time. Steve Zakelj, a certified financial planner with Flatirons Wealth Management in Boulder, Colo. explained that a good vacation starts with planning.

“Start saving for it with $100, 500, $1,000 a month in the winter,” he said. “Set up a vacation account that gets an automatic deposit every month of the year. This way, you’re prepared for your summer trip and have a definitive budget you can use without guilt or long-term problems. Keep the monthly contributions going year-round so you’re already saving for next summer’s fun the moment you get back.”

Once you have your budget set, research places that are within your price range. If you love traveling overseas, try staying at budget-friendly, off the beaten path locations, like Sophia, Bulgaria. The average price of a hostel in Bulgaria’s capital is just $6.99 per night.

You can also keep your traveling costs low by thinking ahead. If you’re going to be out on the town a lot, there’s really no need to book an expensive hotel. If you are thinking the more activities the better, pick out ones that are affordable. “At your destination, look for free or cheap shows, events or festivals as opposed to venues that require the purchase of a pricey ticket,” explained Zakelj.

Another way to reduce vacation expenses is to stay put for a staycation. Plan local activities, hit up your favorite restaurant. Cutting out travel and accommodation expenses will allow you to funnel your money to some fun around town.

Get creative with child care

Having your kids home from school can make summer expensive, especially if you need to pay for child care. First, try asking other parents what their plans are — they may be privy to information about affordable camps or summer clubs you didn’t know existed. You may also find someone with a flexible schedule who can share child care duties with you. You take the kids one week, they take them the next and that frees up time for both of you to get stuff done without paying for day care or babysitters.

If you have relatives or your parents live nearby, see if it’s possible for your kids to visit for a week or two during the summer. Your loved ones get the benefit of seeing your kids, and you get the benefit of a free week of child care.

The YMCA is also a great source for affordable summer camps. This organization operates more than 1,850 day camps across the country. Search the YMCA site to find a camp near you.

When you do have the kids around, there are countless low-cost activities to keep them busy. “Enjoy the outdoors on the cheap,” suggested Zakelj. “Take hikes, go fishing, ride bikes, etc.  After an initial expense, most of these activities can have very low ongoing expenses.”

Pause your subscriptions

According to a study by tech consulting firm Waterstone Management Group, the average adult American spends $237.33 per month on subscription services. Summer, with its long days and beautiful weather, presents a great time to cut back on these costs. Are you running outside more? Consider canceling or pausing your gym membership. Find yourself hanging out with friends more often than sitting at home binge-watching TV shows? Cancel your Netflix account until the fall.

Take some time and comb through your bank account statements to find the subscription charges. Then, go through each one to see if you actually use it and if it truly adds value to your life. If you the answer is “no” to any of the services, cut away.

Don’t overdo it on the air conditioning

As the days get hotter and hotter, keep in mind that one big budget buster is your power bill. The Department of Energy says that air conditioners cost American homeowners about $29 billion annually. If you keep the AC cranked day and night, that’s a lot of money down the drain.

Instead of cooling an empty house, invest in a programmable thermostat that you can keep 7 to 10 degrees hotter than the setting you keep it at when you’re home. Doing this will save you about 10% on your power bill annually. If your AC unit is outdated, it might make sense to purchase a new, high-efficiency unit. Before you take that plunge, do some research on smart ways to finance the purchase.

Beyond taking steps to reduce energy costs with your AC unit directly, you can install ceiling fans to help circulate air. Consider planting leafy plants outside of your home (especially near windows), as they’ll shade your home and help keep it cool.

Take advantage of BBQ weather

You can avoid overspending during the summer by cutting back on dining out. The average American household shells out $2,667 on food costs outside of the home. The weather is nice and the days are longer, so why not have friends over to your place instead of going to a restaurant? As Zakelj explained, even reducing smaller expenses will help you keep spending under wraps.

“If you eat out regularly, think about eating your dinner at home and just going out for ice cream afterward,” said Zakelj. “You still get the fun of a trip out but just buying dessert is much cheaper than paying for an entire meal. Or have friends over to the back patio for BBQ and beer instead of hitting restaurants with them.”

Be realistic about wedding season

One big reason for summer overspending is weddings. According to wedding marketplace The Knot, the average amount guests spend on an out-of-town wedding is a whopping $901, including travel, attire, accomodations and gifts.

If you have to attend, save some cash by searching for cheap lodging. Check sites like HotelTonight.com for deals on rooms, or consider splitting the cost of a house through Airbnb or Vrbo. If you’re traveling alone, see if there’s another single friend with whom you can split a room. If you opt for a hotel, try to stay at the one reserved by the bride and groom — it’s common for the couple to request a block of rooms for their guests, often at a rate lower than listed prices.

As for traveling to the wedding, if it’s within driving distance, see if anyone wants to carpool to save on gas costs. Look into Amtrak, as it often has deals when you travel with multiple companions. Some airlines, like Southwest and United Airlines, also offer group rates, but you’ll need at least 10 people to take advantage of them.

While we all like to look spiffy for big events, there’s no need to break the bank on your wedding attire. Need a tux? Rent one from a site like TheBlackTux.com, which lets you try one on for free. Looking for a dress? Try RentTheRunway.com, where you’ll get 20% off your first rental.

Also, keep in mind: You don’t have to attend a wedding simply because you were invited. If the cost is high, ask yourself if you’re really that close to the couple getting hitched. If you’re not, skip it and send a gift instead.

Speaking of gifts: The earlier you buy from the wedding registry, the better. There will be plenty of options available, giving you the chance to purchase something the couple wants that’s well within your budget. If there’s not something affordable on the registry, ask other guests if they want to purchase a larger item together.

Beware of summer sales

There are plenty of sales during the summer — from July 4 weekend to back-to-school — but that doesn’t mean you need to hit every one. Take an inventory of all the items you already have, like notebooks and pens from the previous school year, or kids swim apparel that will still fit next summer. Once you know what you have, you can make a list of what you actually need. Let that list be your guide to summer sales. If it’s on the list, look into the sale. If it’s not, move along. Having a concrete reminder of the things you need will help you avoid spontaneous purchases that can derail your long-term savings goals.

The bottom line

It can be easy to overspend during the summer, but there are plenty of ways to avoid it. You just have to take the time to think through purchases, do some research and plan wisely. Dedicate yourself to streamlining your spending and you’ll see autumn arrive with your budget intact.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Chris O
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Chris O'Shea is a writer at MagnifyMoney. You can email Chris here

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