Retirement Planning at 50: How to Assess If You Have Enough

By age 50, retirement planning becomes urgent. You’re likely earning more than ever, and financial obligations like a mortgage or tuition may be easing. This is your chance to boost savings and prepare for the years ahead. Here’s how to assess if you’re on track:

• Savings Benchmarks: Many experts suggest aiming for 6× your annual income saved by 50. For example, if you earn $100,000 annually, your target is $600,000.
• Catch-Up Contributions: You may be able to contribute up to $31,000 to a 401(k) and $8,000 to an IRA in 2026, subject to IRS limits.
• Healthcare Costs: Some estimates suggest planning for $172,500 in medical expenses during retirement, excluding long-term care.
• Future Expenses: Estimate basic living costs (housing, food, transportation) alongside lifestyle goals like travel.
• Social Security Timing: Delaying benefits until age 70 may increase monthly payments by up to 8% per year after full retirement age.
• Withdrawal Strategy: Balance taxable, tax-deferred, and Roth accounts using tax-efficient withdrawal strategies to help manage taxes and support steady income.

Start with these steps: Review your savings, estimate expenses, project growth, adjust investments, and plan for healthcare and Social Security. Tools like retirement calculators can help you close gaps and stay on track. A clear plan today means more financial security tomorrow.

How to Plan for Retirement in Your 50's

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Step 1: Review Your Current Retirement Savings

To figure out if you're on track for retirement, the first step is to get a complete picture of your financial situation. This means taking stock of both what you own (your assets) and what you owe (your liabilities). Having this financial snapshot is essential for planning the next steps and seeing how your savings align with recommended benchmarks.

Calculate Your Net Worth

Your net worth is one of the best ways to gauge your financial health. It’s calculated with a straightforward formula:
Assets – Liabilities = Net Worth.

Start by listing all your assets. These might include things like cash in checking and savings accounts, retirement accounts (such as 401(k) plans or Roth vs. Traditional IRAs), investment portfolios, home equity, and even personal items like cars or jewelry. Then, subtract your liabilities, such as a mortgage, credit card balances, student loans, car loans, or any other debts.

R.J. Weiss, CFP and Founder of The Ways to Wealth, emphasizes the value of this calculation:

"Net worth is a good measuring stick for yourself, a way to provide feedback on how you're doing financially."

This highlights why income alone doesn’t tell the whole story. For example, someone earning $150,000 annually but carrying $200,000 in debt could be in a worse financial position than someone earning $75,000 with minimal debt and steady savings. To stay on top of your financial progress, experts recommend checking your net worth at least twice a year. Additionally, if a large chunk of your assets is tied up in less liquid investments like real estate, it’s smart to maintain an emergency fund that covers 3 to 6 months of essential expenses in a high-yield savings account.

Once you’ve calculated your net worth, you can use it to measure how close you are to reaching retirement savings goals.

Compare Your Savings to Retirement Benchmarks

After determining your net worth, the next step is comparing your retirement savings to established benchmarks. By age 50, you should aim to have saved about 6× your annual salary. For example, if your yearly income is $100,000, you’d want around $600,000 in savings. Keep in mind, though, that these benchmarks can vary depending on the financial expert you consult.

These targets are designed to help you replace approximately 70% to 85% of your pre-retirement income through a mix of savings and Social Security. Understanding how to maximize Social Security benefits is a critical part of this calculation. To break it down further: if you’re aiming for $1,000 in monthly retirement income, you’ll typically need about $240,000 in savings. This assumes a 5% withdrawal rate and a 5% return on investments.

If your savings fall short of these targets, take advantage of catch-up contributions as you approach retirement. Jay Zigmont, CFP and Founder of Childfree Wealth, offers this perspective:

"The key with net worth is to realize that net worth does not equal self-worth. I encourage people to check their net worth twice a year and ensure it is going in the right direction."

Step 2: Calculate Future Retirement Expenses

Once you've reviewed your current savings, it's time to figure out what your retirement expenses might look like. This involves breaking down both the essential costs you'll need to cover and the extra spending that will shape your dream retirement lifestyle.

Estimate Basic Living Costs

Start with the essentials. Think about the expenses you can't avoid, like:

• Housing: Mortgage or rent, property taxes, insurance, and maintenance.
• Utilities: Electricity, water, heat, phone, and internet.
• Food: Groceries and dining basics.
• Transportation: Car insurance, gas, and maintenance.
• Healthcare: Insurance premiums, co-pays, prescriptions, and more.

Healthcare, in particular, requires careful planning. For example, a 65-year-old retired couple might need around $330,000 (after taxes) to cover healthcare costs throughout retirement. This includes Medicare premiums - starting at $185 per month for Part B in 2025 - along with deductibles, co-pays, prescription drugs, and services like dental and vision care that Medicare doesn’t cover.

Steve Feinschreiber, Senior Vice President of Financial Solutions at Fidelity, highlights this challenge:

"Fortunately, many people who have saved adequately for retirement can fulfill their dreams because their overall expenses are generally reduced in retirement save one important category - health care."

Inflation is another factor to consider. While most expenses may rise by 2%-3% annually, healthcare costs tend to increase faster - around 6.1% per year. To stay on track, it’s helpful to calculate healthcare expenses separately from other costs.

Factor in Lifestyle and Life Expectancy

Now think about the life you want to live in retirement. Will you travel often? Pick up new hobbies? These "extras" can significantly influence your budget. If you’re planning an active retirement packed with travel and entertainment, you may need to add about 15% to your retirement budget compared to a simpler lifestyle.

For perspective, a one-week domestic vacation typically costs about $1,500 per person, while a two-week trip to Europe could run up to $4,500 per person. If you’re planning multiple trips each year, especially in the early years of retirement, these costs can add up quickly.

Beau Zhao, Director of Financial Solutions at Fidelity, stresses the importance of tailoring your plan:

"Each family's retirement situation is different. The amount of time until you retire, spending habits, travel plans, health conditions, and unexpected costs can all vary dramatically. That is why it is important to adjust the spending guidelines based on your own needs and wants."

To account for longevity and inflation, plan your budget through age 95. A good starting point is to aim for 55% to 80% of your pre-retirement income. However, this range depends on factors like your lifestyle and whether you've cleared major debts, such as your mortgage. To build a realistic baseline, track your current spending for 12 to 24 months before retirement. Then adjust for costs that will decrease (like commuting and payroll taxes) and those likely to rise (like healthcare and travel).

Step 3: Project Savings Growth and Close Gaps

Once you've estimated your retirement expenses, it's time to evaluate whether your current savings path aligns with those future needs. This means projecting how your savings will grow over the next 15 to 20 years and spotting any gaps between what you'll have and what you'll need.

Maximize Catch-Up Contributions

If you're 50 or older, catch-up contributions can be a game-changer. In 2026, you can contribute up to $31,000 to your 401(k) and $8,000 to your IRA.

Want to make saving easier? Automate a 1% annual increase in contributions. Over time, this small tweak can make a big difference in your retirement fund. Plus, consider redirecting raises, bonuses, or tax refunds into your retirement accounts to close any gaps more effectively.

After boosting your contributions, take a moment to see how these changes impact your portfolio's growth.

Model Savings Growth with Retirement Calculators

With your updated contribution strategy, it's time to get precise. Retirement calculators are great tools for projecting how your portfolio might grow and for identifying any shortfalls. These calculators factor in compound interest and the time value of money to show how your current savings stack up against your future needs. The difference between these two numbers reveals if you're on track - or if there's work to do.

When modeling growth, it's smart to stick with conservative assumptions. A 5% to 7% annual return is a reasonable estimate, especially for portfolios that gradually shift to safer assets as retirement nears. Don't forget to include investment fees, which can range from 0.05% to over 1.0%. Over 20 years, these fees could reduce your portfolio's value by 15% to 25%.

Chloe Wolhforth, a Financial Planner and Senior Managing Director at Angeles Investments, emphasizes the importance of this step:

"Investing is a critical part of growing wealth. It is important to invest savings that you have identified as long-term so your assets can grow over time."

Tools like Mezzi's Investment Fee Analyzer can simplify this process. They allow you to input details like your current portfolio balance, annual contributions, expected returns, and even asset management fees. This turns vague concerns into clear, actionable numbers, showing exactly how much you need to save each month to hit your target. By taking the time to project growth and address any gaps, you're building a stronger foundation for a secure retirement.

Step 4: Adjust Your Portfolio and Lower Taxes

Once you've projected your savings growth, it's time to fine-tune your investments and tax strategies to ensure a steady retirement income.

Balance Your Asset Allocation

Your mix of stocks and bonds should align with how close you are to retirement. A good starting point is to review target-date funds from major investment firms. These funds automatically adjust their allocation as you age, offering a useful benchmark for comparison.

A practical method to manage your investments is the bucket strategy. Here's how it works:

• Bucket 1: Hold 1–2 years of living expenses in cash for immediate needs.
• Bucket 2: Allocate 3–10 years' worth of expenses in bonds or TIPS (Treasury Inflation-Protected Securities) for medium-term stability.
• Bucket 3: Invest funds you won't need for 10+ years in stocks to aim for long-term growth.

This approach helps you avoid selling investments during market downturns. Adjust your allocation based on your personal circumstances. For instance, if you have a pension or expect a longer retirement, you might lean more toward stocks. On the other hand, if you've already saved enough or have income concerns, you may want to allocate more to bonds and cash. As Morningstar highlights:

"There's no need to take on additional risk if you've already saved enough to meet your financial goals".

When rebalancing your portfolio, consider making changes within tax-advantaged accounts like IRAs or 401(k)s. This can help you avoid capital gains taxes while keeping your asset mix aligned with your goals.

Once your portfolio is balanced, it's time to focus on minimizing taxes on your gains.

Cut Taxes with Mezzi's Tax Tools

Effective tax planning can stretch your retirement savings further. One powerful tactic is asset location - placing tax-efficient investments, such as equity ETFs, in taxable accounts while holding less tax-efficient assets, like bonds, in tax-advantaged accounts such as IRAs or 401(k)s. This strategy can reduce your annual tax liability.

Mezzi's platform can simplify tax management even more. It helps you avoid wash sale rule violations, which occur when you sell a stock at a loss and repurchase it within 30 days, invalidating your tax deduction. Mezzi automatically monitors your accounts to flag these situations and identifies opportunities for tax-loss harvesting. This allows you to offset gains or deduct up to $3,000 from your ordinary income. Over time, these small adjustments can significantly lower your overall tax burden.

Step 5: Plan for Healthcare, Social Security, and Retirement Income

Once you've established a balanced portfolio and tax strategy, it's time to focus on securing steady income streams and preparing for healthcare costs during retirement.

Prepare for Healthcare and Long-Term Care Expenses

Medicare doesn’t cover everything - dental, vision, hearing, and most long-term care expenses are excluded. To bridge this gap, retirees may need substantial after-tax savings, potentially up to $172,500 for individuals, with even higher amounts for couples.

If you have a high-deductible health plan, take advantage of a Health Savings Account (HSA). HSAs provide a triple tax benefit: contributions are pre-tax, they grow tax-free, and withdrawals for qualified medical expenses are also tax-free. For 2026, contribution limits are $4,400 for individuals and $8,750 for families, with an additional $1,000 catch-up contribution if you're 55 or older.

Steve Feinschreiber, Senior Vice President at Fidelity, highlights the challenge:

"Health care is creating a 'retirement cost gap' for many pre-retirees. Many people assume Medicare will cover all your health care costs in retirement, but it doesn't."

Long-term care coverage is another consideration. Purchasing a policy between your late 40s and early 60s often means lower premiums and easier qualification. Hybrid policies, which combine life insurance with long-term care benefits, have become a popular option.

Optimize Social Security Timing

Timing your Social Security benefits can make a big difference in your lifetime income. While you can claim benefits as early as age 62, delaying until age 70 can increase your monthly payment by about 87% compared to claiming early. Beyond Full Retirement Age, your monthly benefit grows by roughly 8% for each year you wait.

The strategy is simple: use your retirement savings to cover expenses until age 70, which effectively "buys" you a larger, inflation-adjusted income stream for life. Jim Dahle, founder of White Coat Investor, explains:

"By retiring before age 70 and covering spending with your own assets, you are effectively 'buying' a bigger Social Security payment."

Couples often benefit when the higher earner delays claiming until age 70, as this maximizes survivor benefits. However, even if you postpone Social Security, make sure to sign up for Medicare at age 65 to avoid permanent late-enrollment penalties.

Create a Withdrawal Strategy

With your savings and tax plans in place, the next step is crafting a withdrawal strategy to secure your retirement income. Blend withdrawals from taxable, tax-deferred, and Roth accounts to keep yourself in lower tax brackets before Social Security benefits and required minimum distributions (RMDs) kick in at age 73.

A study by T. Rowe Price highlights how strategic withdrawal timing can reduce taxes and increase after-tax legacy. William Reichenstein, Ph.D., Director of Thought Leadership at T. Rowe Price, notes:

"Investors with more than one type of account can do better than following the conventional wisdom strategy when withdrawing funds in retirement."

Adam Olson, CFP® at Mutual of Omaha, suggests creating a "guaranteed income floor" by relying on Social Security, pensions, or annuities to cover essential expenses. Use portfolio withdrawals for discretionary spending and keep 1–2 years of expenses in cash to avoid selling investments during market downturns. Adjust your withdrawal rate based on market conditions instead of sticking to a fixed percentage[53,54]. By combining these withdrawal methods, you can build a tax-efficient, reliable income plan for your retirement.

Conclusion: Build Confidence in Your Retirement Plan

Planning for retirement at 50 starts with a structured approach to evaluate your readiness. Begin by measuring your savings against established benchmarks. Next, estimate your future expenses by considering basic living costs, lifestyle preferences, and life expectancy. Use retirement calculators to project how your savings could grow, and take advantage of catch-up contributions to maximize your efforts.

Regularly review your savings, estimate your expenses, adjust your portfolio, and refine your tax strategy. These actions create a roadmap to help you feel secure about your financial future. Focus on key elements like healthcare costs (which might total $172,500 for individuals), the timing of Social Security benefits (delaying until age 70 can increase your monthly payout by about 8% for each year past full retirement age), and a withdrawal plan that balances taxable, tax-deferred, and Roth accounts.

To stay on track, use tools like the "3-Number Check" to assess your progress. This includes understanding your savings multiple (how much you’ve saved compared to your salary), identifying your monthly gap (the difference between 80% of your current income and your Social Security income), and ensuring you have an emergency fund to cover several months of expenses. Research shows that successful retirees often keep their monthly gap under 40% of their current income.

Mezzi’s platform simplifies these strategies by securely consolidating all your financial accounts in one place. It also highlights tax-saving opportunities, such as avoiding wash sales, and provides AI-driven insights tailored to your situation. Optimizing your tax strategy alone could increase annual returns by 1% to 2%, potentially adding $10,000 to $20,000 a year on a $1 million portfolio. Additionally, avoiding traditional 1% advisor fees might save you over $1 million across 30 years.

While market fluctuations, inflation, and life expectancy remain uncertain, regular 10-minute checkups can help you spot potential issues early. By combining these steps with consistent monitoring, you can ensure your retirement plan supports the years of hard work you’ve invested.

FAQs

Does the 6× income benchmark include home equity?

The 6× income benchmark usually excludes home equity. Instead, it primarily emphasizes liquid assets, such as savings and investments. While some interpretations might factor in home equity in specific scenarios, most recommendations focus on assets that can be quickly accessed to cover retirement expenses.

What’s a safe return assumption for my retirement calculator?

A reasonable assumption for investment returns in your retirement calculator is typically around 4% to 5% annually. This range offers a cautious estimate, aligning with common withdrawal rates. However, keep in mind that actual returns can fluctuate depending on market performance and your unique financial circumstances. Regularly revisiting and adjusting these assumptions is key to keeping your retirement plan on track.

How do I choose which accounts to withdraw from first?

The right withdrawal strategy hinges on your specific tax situation and retirement objectives. A common approach is to begin with taxable accounts to minimize additional taxes. After that, you can turn to tax-deferred accounts like 401(k)s or IRAs, making sure to account for required minimum distributions (RMDs). Roth accounts are typically tapped into later since withdrawals from these accounts are tax-free. To fine-tune your plan, consider aligning your withdrawals with Social Security strategies and seeking advice from a tax professional.

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