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Experts generally recommend that retirement planning should start as early as possible, but it’s never too late to start saving. Still, saving for retirement has been difficult for many Americans due to a recent confluence of factors, including inflation, soaring rates and the return of student loan payments.
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Yet, with a plan and discipline, experts said there are a few steps you can take to retire by age 65 — even if you start investing in your 50s.
“If you’re in your 50s, retirement is nearly around the corner for you,” said Steve Sexton, founder and president of Sexton Advisory Group Inc. “This means boosting your retirement savings and investments while minimizing your debts should be your top financial priorities. While everyone’s financial situation varies, there are a few things I would recommend prioritizing in your 50s.”
Here are a few steps experts recommend.
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1. If You Have a 401(k), Contribute the Maximum Amount
If possible, contribute the maximum amount to your 401(k) every year until you retire — especially if your employer offers fund matching, said Sexton.
According to him, this is a simple way to responsibly invest your money in retirement. You’ll also defer paying taxes on this income until you withdraw these funds. This frees up additional funds now for you to allocate to other investment vehicles or pay down current debt.
2. Reevaluate Your 401(k) Allocations
Another important step, Sexton said, is to reevaluate your 401(k) allocations. Indeed, as you near retirement, it’s typically recommended to take a more conservative approach.
“The mutual funds you allocated your 401(k) to in your 20s and 30s are going to look different than your allocations in your 50s,” he said. “Consider looking into whether your 401(k) plan offers target-date funds, which automatically adjust asset allocations to your goal retirement year.”
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3. Fund Your IRA
In the same vein, Sexton also recommends funding your IRA to the max every year until you retire.
As he explained, the maximum contribution you can make to your IRA in 2024 if you’re 50 or older is $8,000.
Sexton shared that doing so can pad your retirement investments and savings. “And if you haven’t been aggressive about contributing the max amount in the past, now is the time to do so,” he added.
4. Evaluate Your Social Security Benefits
Your 50s is also a good time to dive into what your Social Security benefits could look like.
“There are plenty of reliable online estimators that can help you determine how much Social Security you can expect to receive on a monthly basis,” said Sexton. The longer you’re able to put off claiming Social Security benefits, the more you’ll likely receive in the long run — so this should be factored into your financial retirement plan, he added.
Melissa Murphy Pavone, CFP, CDFA and director of investments at Oppenheimer & Co. Inc., echoed the sentiment. She added that consulting with a CFP can provide personalized guidance and help retirees navigate these important decisions such as when to turn on Social Security.
If you’re pre-retirement, your CFP can create a Social Security optimization strategy, she said. “The potential to live a long life makes decisions about when to claim your Social Security benefits more important than ever.”
5. Build Smart Financial Habits
Of course, saving quickly and on a shorter timeline may require building certain financial habits, such as budgeting, living below your means and paying down debt.
“This is critical to achieving retirement by 65,” said Sexton. “If you’re behind on retirement investments, it may also help to consider more aggressive savings tactics, like downsizing, moving to a lower-cost state or taking on another job or extra work.”
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This article originally appeared on GOBankingRates.com: I Started Investing in My 50s: 5 Things I Did To Retire by 65
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