1. Mindfully Manage Education Expenses While Saving for Retirement
We all know college is expensive, but the rising cost of tuition, fees, living expenses, books, food and more can amplify that burden for parents and children alike.
In 2025, the Education Data Initiative reported that families can spend upwards of $38,270 per year on education expenses for each child. Assuming they graduate in 4 years (a landmark feat accomplished by less than half of students), that adds up to $153,080—for just one child. This number happens to be just below the average 401(k) balance for people in their 50s.
While many parents want to help their kids with college expenses, they need a plan that doesn’t jeopardize their retirement goals. With proactive planning, you can help minimize the amount of student debt your child takes on and keep your nest egg intact. Here are a few ideas to help:
- Work with a financial advisory team who is experienced in college planning
- Make the most of scholarships, grants, and financial aid
- Prioritize in-state public colleges and universities as tuition can be lower than out of state or private schools
- Save early and often
- Make your kids part of the savings plans and discussions
- Work with your kids to take out the appropriate loans for their financial situation
When it comes to funding education, it all comes down to balance. If you can contribute fully to your retirement funds and investment accounts and still have enough leftover to cover tuition, you are in great shape. If that isn’t an option for you, the main idea is to not sacrifice your retirement savings or dip into your 401(k) to cover education costs. Remember, there is no loan for retirement and your children likely have a much longer investment horizon than you do.
2. Make a Plan for Caregiving Costs
Many in their 50s have aging parents and loved ones they become responsible for taking care of. This can be an emotionally and financially complex situation. Caregiving can take up a lot of time, cause emotional stress, and drain resources. Be sure to make a plan with your loved ones to help share these expenses.
It can also be challenging to strike the right balance between financially caring for parents and contributing to your retirement and savings goals. Here are some things you can do to help:
- Take advantage of government programs and aid
- Enlist the help of other family members and friends
- Hire professional caregivers, even if it’s only a few hours a week
- Check in with loved ones about any savings or retirement accounts they have that could help cover some of the costs
- See if they have a long-term care policy, including coverage limits and payout terms
- As a last resort, you may want to consider leveraging a reverse mortgage, if the family member owns a home with significant equity
- Grant yourself some patience and grace
With the average nursing home cost exceeding $100,000 per year in 2025, you should consider using resources available to help cover some of those costs. Caring for an aging relative can be difficult, but you should prioritize your own financial wellbeing first to take care of your future.
3. Maximize Catch-Up Contributions for Retirement
Once you turn 50, you can partake in catch-up contributions for your retirement accounts. If your cash flow allows, this can be a helpful way to infuse extra money into your funds, bolstering your account for retirement.
You might need to adjust spending habits to redirect some extra cash into your investments, but with 10 to 15 years of compounding, those investments could see considerable gains. Here are the catch-up contribution limits for common retirement funds:
- For 401(k), 403(b), and most 457 plans, the “base” catch-up contribution is $7,500 in 2025. With an annual limit of $23,500, that extra money could bump your savings to $31,000 per year starting in 2025. Given an average return of around 7%, investing that amount for 10 years could accumulate to over $450,000.
- Individuals aged 60-63 may be able to make a “super” catch-up contribution of $11,250, if their retirement plan allows it.
- For traditional and Roth IRAs, the catch-up contribution is $1,000. The 2025 contribution limit is $7,000, meaning those over 50 can contribute up to $8,000 per year.
- For SIMPLE 401(k) plans, the catch-up contribution is $3,500 for 2025.
Catch-up contributions help you maximize compound interest and accelerate the growth of your accounts. Given many workers in their 50s are at their peak earning years, redirecting money into retirement savings at these amounts may be a bit easier.
4. Refine Your Investment Strategy as You Approach Retirement
In your 50s, you may also need to further refine your investment plan as it will likely grow and evolve, depending on your specific retirement goals.
One way to infuse more resources into your investment strategy is to allocate your bonus and a portion of any raises into your investment account. When you were younger, you may have used part of your bonus to fund a home improvement project or buy a plane ticket for your next vacation. But as you near retirement, redirecting your bonus into investments can help you save more for the future.
While bonus structures fluctuate depending on the company, most are between 2 to 7.5% of a person’s base salary. If you are earning $100,000 and have a 5% bonus, that’s an extra $5,000 you can invest.
If you get a healthy salary bump you can divert a percentage or two toward your investments. This added bump in resources can help you maintain motivation to invest, create consistency in your plan, and continue to establish healthy financial patterns.
Reassess Your Investment Allocations for a Stronger Retirement Plan
In addition to being more intentional about your investment plan resources, it’s also important to make sure your investments are allocated in ways that make sense for where you’re at now. Ask yourself a few questions:
- Are there areas where you can strengthen your portfolio?
- How is your investment philosophy shifting as you near retirement?
- What are your long-term investment goals? Consider retirement and beyond.
As you approach your 50s, aligning your investment strategy with your retirement goals becomes even more important. Redirecting bonuses and salary increases into investments can help to bolster your savings trajectory. This deliberate approach not only helps to enhance financial security but also fosters consistency and reinforces healthy financial habits. Moreover, reassessing your investment allocations helps to make sure they reflect your current life stage and long-term aspirations, guiding you towards a robust and well-prepared retirement plan.
5. Avoid Withdrawing from Retirement Accounts
While your 401(k) may have had twenty plus years to accumulate a healthy balance, it can be tempting to take a loan from it to supplement current extra costs. But doing so can be a lot more hassle than it’s worth. Yes, sometimes a 401(k) loan makes sense; but it needs to be a strategic choice that benefits you in the long-term.
Once that tuition bill comes in or your kitchen remodel gets closer, you might be tempted to dip into your retirement accounts to foot the bill. Remember, you can’t withdraw funds from an IRA until you are 59 ½ without incurring a penalty. Even though you can technically borrow from your 401(k), you will need to factor in interest payments on top of the repayment period.
In general, your 50s are a prime decade for earning. You may not want to take on more debt and potentially jeopardize the savings you’ve spent so many years building.
6. Eliminate Debt Before Retirement
Being debt-free is a big goal for many. Whether you are making the last payment on your car or are tantalizingly close to paying off your mortgage, there are so many benefits to being debt-free, especially as you prepare for retirement.
Eliminating your debt can free up cash flow to put toward other priorities like maxing out your 401(k), IRA, HSA, and other investment vehicles. It takes you one step closer to financial freedom and can bring added flexibility to your financial life.
Keep in mind, you want to balance your debt with other financial goals. Where it makes sense to pay off any credit card or high-interest debt quickly, sacrificing a retirement contribution to get rid of your mortgage is a much different situation. Be strategic about debt-management: pay off your high-interest debt in a reasonable timeframe while protecting your long-term financial goals.
7. Plan for Your Future and Set Goals
With retirement on the horizon, it’s a necessary time to start thinking about and planning for your post-employment future. Now is when you get to actively imagine the type of life you want to live in retirement. By planning early and brainstorming different ideas, you will be able to craft a plan that works best for you. Here’s what to consider:
Figure Out Where You Want to Live
Does it require a move? How will your taxes, retirement benefits, and general expenses be impacted? Researching different locations—whether it’s a dream destination or somewhere closer to family—can also help you determine the cost of living, healthcare access, and whether you’ll need to downsize or maintain a larger home. Thinking about the lifestyle and community you want to be part of is an important consideration to making sure your chosen place supports your desired quality of life.
Make a Plan For Your Time
Do you see yourself embarking on a new career? Or do you want to take it easy and only work part-time? Or what about not at all? It is important to figure out how you want to spend your future. It can bring you fulfillment and purpose, two elements that can help lead to a happy retirement. Whether it’s pursuing hobbies you’ve longed for, volunteering, or even starting a small business, having a well-thought-out plan for how you will structure your days will help you stay mentally and emotionally engaged throughout retirement. I like to tell my clients, “Practice being retired now. Try to make time for yourself and what makes you truly happy, starting today, so you’re ready for that new work-optional lifestyle.”
Maintain Your Health
Your health, both mental and physical, is the cornerstone of your retirement plan. Think about the type of activities you want to explore and how you will maintain your health and wellbeing. Whether it’s staying active through fitness routines, eating a balanced diet, or staying socially connected, making a plan to prioritize your physical and mental health can help you enjoy your retirement years to the fullest. Consider preventive health measures and how you’ll adjust your habits to accommodate any future medical needs as well.
How a Financial Advisor Can Help You Achieve Your Retirement Goals
Building wealth is a worthwhile goal for everyone. To get there, you need a plan tailored to your unique needs. Abacus is passionate about helping you align your values with your money to live authentically.
Our team is dedicated to helping you create a personalized roadmap to retirement, taking into account your specific goals, challenges, and values. Whether it’s planning for education expenses, managing caregiving responsibilities, or making strategic investment moves, Abacus offers experienced guidance every step of the way.
We understand that your financial future is unique, and we work closely with you to craft a retirement plan that supports your vision for a fulfilling life. With decades of experience and a passion for financial empowerment, Abacus financial advisors are here to help provide clarity, structure, and peace of mind as you build wealth and move toward your retirement goals. Reach out today to begin the next chapter in your financial journey.
