Many people turn 50, and suddenly start thinking about that last day of work, and all of the good things that will come once they retire. IRS have added some tax advantages, to remind you, that you might have a few good years left of work before that happens, and the best way to use them is boosting your future.
Although full retirement age (FRA) to receive full Social Security is 67, most people retire around 62-64 years old. That would mean you have at least 10 years more for working and planning your longest vacation.
However, ten years cannot be that long when we talk about finance, stocks and investment. That’s why experts recommend to start paying close attention and reviewing every option.
What can you do to boost your retirement planning?
One of the best ways to increase your retirement savings is to make “catch-up” contributions to your IRA or 401(k). To be able to do this, you have to to have 50 years old before the end of the year, which means that you don’t have to wait until your actual birthday comes up to start.
People 50 years of age or older can add an extra $1,100 to an IRA in 2026, raising the maximum amount allowed to $8,600. A 401(k) can have a catch-up of up to $8,000, with a maximum of $32,500 allowed for the year after that.
Also in 2026, people between 60 and 63 years old will receive a special $11,250 catch-up; in that age range, the maximum 401(k) contribution will be $35,750.
What you should know about 401(k) catch-up contributions and risk in your 50s
It’s important to keep in mind that the only way you can make a catch-up on your 401(k) in 2026 if you earned more than $150,000 in 2025, will be a Roth 401(k). Doing this, you will have tax-free earnings and withdrawals although you will lose the tax deduction on the money contributed.
However, you won’t be able to make the catch-up contribution if your employer doesn’t offer the Roth option in its 401(k),
As you get closer to retirement, it’s also a good idea to modify risk without going too far. In your 50s, you may still have plenty of working years left, so selling too many stocks can be a mistake. Going over your equity exposure to figure out if it makes sense to slightly reduce it is the right strategy, according to the experts. You could consider switching out some growth stocks for more reliable dividend stocks if you’re looking for lower risk.
Not diversifying enough is another big error. Concentrating money in a small number of high-potential stocks can be tempting if you’re trying to “catch up” or increase savings faster after years of low savings. However, you might not have enough time to recover before retirement if you invest a considerable percentage, say 20%, in a single stock and it declines.
f you’re not sure about your level of diversification, you can also increase it by buying shares of an S&P 500 index fund.
Carefully preparing your next big vacation
Those last years of work can be of really useful to boost your retirement plan for a even better retirement.
Your investment portfolio can be protected from financial crises and still maintain growth if you choose consistent dividends, diversify across industries, use an S&P 500 index fund, and lower some risk without giving up on stocks entirely.
When it comes to investments and where to place your money, it sometimes doesn’t come so easy to everyone. If you are not sure of what option is best for you, you can always look for a professional in finance to guide you through the process.
The most important thing will be to try to take advantage of that last window to make the next chapter even better and smoother.