Retirement planning tips for women in their 40s and 50s

Content Type: Article

Here’s what you should do during these crucial decades of your life to set yourself up for a financially secure retirement.

Your 40s and 50s are a pivotal point in your financial life. These decades are full of opportunities to leverage your prime earning years to help boost your retirement savings. Additionally, it’s also an ideal time to strategize how you’ll put those savings to use in the future. Ideally, your 40s and 50s should build on the strategies you put in place in your 20s and 30s.

Here are five ways to take advantage of your prime earning years to make the most of your financial opportunities to help you maximize your retirement savings.

Calculate your net worth

“Your net worth is a key indicator of your financial health and financial stability,” says Christine M. Ceron, Wealth Advisor at Regions Private Wealth Management in Fort Lauderdale, Florida. “Knowing your net worth can help you manage your money better and make plans for achieving your goals.”

It’s important to understand the definition of net worth. While large homes and nice cars may give the impression of wealth, wealth is measured by comparing what you own with what you owe.

One easy way to calculate your net worth is to use an online net worth calculator, which allows you to compile your assets (house, retirement, savings accounts, etc.) and subtract your liabilities (mortgage, credit card debt, auto loans, etc.). The remainder is your net worth. Remember to calculate your net worth annually, as it may change from year to year.

“Your 40s and 50s are a good time to start calculating your net worth,” says Ceron. “When you’re younger, you might have a negative net worth because you might have more debts than assets. As you transition into your 40s and 50s, you might have retired some of that debt and gained assets, like a house.” With a growing net worth comes an increasing ability to set more money aside for retirement.
Eliminate credit card debt

Beyond simply impacting your credit score, carrying large balances and incurring interest siphons money away from your savings and retirement streams. What’s more, says Ceron, “credit card debt leads people to have anxiety and stress month after month,” which makes it more urgent to begin reducing these debts in your 40s and 50s.

If you are carrying debt on multiple cards, Ceron recommends one of two approaches: Either focus on paying off the debt that carries the highest interest rate or start by paying off the card with the smallest balance before moving on to the next one. “It all depends on what motivates you,” she says.

To avoid accumulating debt in the future, identify the trigger points that led you to make those charges in the first place and take steps to alter that behavior.
Maximize your retirement contributions

You’re in the stage of life when your child’s college tuition might be vying for your spending dollars. But it’s crucial not to divert funds from your retirement savings plan. In fact, after age 50, it’s advised to kick your retirement contributions into a higher gear.

“Contribution limits for 2024 have increased across the board,” says Ceron. As of 2024, the IRS permits individuals to contribute up to $23,000 yearly into a company’s 401(k) or 403(b) plan. Depending on your tax situation, you may be able to contribute up to $7,000 into an individual retirement account (IRA) or Roth IRA.

After you turn 50, you may be able to contribute additional annual catch-up payments of an extra $1,000 into an IRA and up to $7,500 extra into a 401(k) or 403(b), depending on your plan and your tax situation. By maximizing retirement contributions as soon as you’re eligible, you’ll give those additional funds more time to grow before you retire.
Consider long-term care insurance

Long-term care expenses can drastically cut into retirement savings. Long-term care insurance can significantly reduce those costs. But as with life insurance, your ability to secure coverage depends on your health. Some experts suggest applying for long-term care insurance in your early 50s to find out whether you can obtain coverage. Insurers factor in your age as well, so your premiums will most likely be lower if you start coverage earlier.

Ceron advises women in these decades to look at long-term care insurance as an asset, not a liability. “These policies have become very flexible and affordable over time. There are hybrid policies that combine life insurance as well as health care and death benefits,” she says. “I highly recommend women in this age group look at the different types of policies and find one they can afford,” says Ceron, adding that annual premiums are generally a few thousand dollars a year.
Participate in financial planning sessions

You may find yourself shying away from financial planning because you aren’t familiar with the elements or components of it, but whether you’re single or married, it is crucial to proactively participate in planning your financial future.

Don’t hesitate to engage trusted professionals—such as a wealth advisor, tax accountant and attorney—to answer your questions and help you formulate and regularly reevaluate your savings and retirement plan. It’s important to have that relationship established before you need it in a crisis such as the passing of a spouse or loss of income.

“A wealth advisor will work side by side with you, keeping you motivated and giving you the confidence you’re going to be able to retire,” Ceron says. “A financial advisor is like your own personal cheerleader, someone holding your hand through life events and keeping you on track to retire.”

By leveraging the financial knowledge you gain during your 40s and 50s—and leaning on the wisdom of trusted financial professionals—you’ll be equipped to launch into the next phase of your life: retirement.