20 Money Mistakes to Avoid in Your 50s

Avoiding financial mistakes in your 50s is the key to a stress-free retirement, ensuring your hard-earned money lasts while still enjoying the life you deserve.

Alyana Aguja
February 19, 2025
5 min read

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Your 50s are an important decade to get your finances in order, preventing costly pitfalls that might spoil your retirement. From juggling debt and healthcare expenses to streamlining investments and income sources, wise choices today can translate to more financial stability down the line. By wise planning, you can have it all - a comfortable retirement, and the flexibility to live life your way.

1. Putting Off Retirement Savings

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If you’ve not yet saved sufficiently for retirement, it is time to play catch-up. Make use of catch-up contributions in your IRA or 401(k) plan to grab as much cash as possible. Each dollar you save now has fewer years to compound, so don’t delay.

2. Underestimating Healthcare Expenses

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Medical expenses tend to rise with age, and Medicare doesn’t cover everything. Consider long-term care insurance or a health savings account (HSA) to help with future costs. Failing to plan for healthcare can drain your savings faster than expected.

3. Carrying Debt Into Retirement

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Going into retirement with credit card balances, personal loans, or a home mortgage can unnecessarily strain your finances. Prioritize paying off high-interest debt now that you still have a reliable income. The less debt, the more you’ll have to live on in retirement.

4. Overspending on Adult Children

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It is only natural that you wish to assist your children, but not at the cost of your financial stability. Shell out for their weddings, automobiles, or rentals at your own peril because these will exhaust your retirement fund. They have plenty of time to get over moneywise than you do.

5. Avoiding Inflation

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What will cost $1,000 today may cost a lot more tomorrow. If your retirement strategy doesn’t include inflation, you may be struggling in the future. Invest in assets that will outperform inflation, such as stocks or real estate.

6. Not Diversifying Investments

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A conservative portfolio is wise as you get older, but being too cautious can be dangerous too. If your funds aren’t increasing sufficiently, you might live longer than your savings. Keep a balanced portfolio with a combination of stocks, bonds, and other investments.

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You can retire on Social Security at 62, but your monthly check will be permanently cut. Waiting until your full retirement age (or 70) will boost your monthly check substantially. A few years of waiting can translate into thousands more in lifetime benefits.

8. Not Updating Your Estate Plan

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If your will, trusts, or beneficiaries are not current, your property might not go where you want. Divorce, remarriage, or grandchildren are life changes that should trigger a review. A good estate plan guarantees your legacy is secure.

9. Dependence on a Single Income Stream

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One source of retirement income—such as a pension or Social Security—will perhaps be insufficient. Look to diversify with several streams such as investments, rental income, or part-time employment. Having diverse income ensures that you remain financially sound.

10. Neglecting Tax Planning

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Withdrawal of retirement savings in the improper order may increase the tax. Strategically drawing on tax-deferred and tax-free funds may save you a few thousand. Engage the services of a financial advisor to design a tax-smart strategy.

11. Purchasing More Space Than Necessary

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More space means greater upkeep, taxes, and utilities. A smaller house may provide a way to allocate extra cash to trips, medical bills, or investments. Don’t allow too large a house to bleed your retirement dollars.

12. Not Having an Emergency Fund

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Even at your 50s, there are surprise expenses such as doctor’s visits or house repairs that can upset your budget. Store at least six months’ worth of cost in a liquid emergency fund. This helps you avoid drawing down on retirement savings prematurely.

13. Cashing Out Retirement Accounts Too Soon

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Withdrawing from your retirement accounts before 59½ is subject to penalties and taxes. Even after that age, pulling out too much too early can reduce the life of your savings. Ensure your withdrawal ratio is in concert with your long-term requirements.

14. Not Understanding Required Minimum Distributions (RMDs)

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At age 73, you’ll need to begin withdrawing from regular retirement accounts or risk significant IRS penalties. Not planning for these withdrawals can result in increased taxes and lower savings. Discover how to take RMDs in a way that will have the least impact.

15. Neglecting to Invest in Yourself

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Your 50s can be a great time to boost your skills or start a side hustle. Investing in continuing education or a passion project can provide additional income in retirement. Don’t assume you’re too old to learn new ways to make money.

16. Overlooking Insurance Needs

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Your needs shift as you get older—life insurance, disability insurance, and long-term care need to be reevaluated. Having unnecessary policies or not having necessary coverage can cost you. Ensure your insurance is in line with your financial objectives.

17. Not Taking Advantage of Employer Benefits

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If you’re employed, find out if your employer has matching 401(k) contributions, stock options, or wellness programs. These benefits can give you free money or tax benefits. Don’t miss out on valuable benefits.

18. Thinking You’ll Work Forever

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Many people assume they can work indefinitely, but health issues or job market changes can disrupt plans. Have a backup plan in case early retirement becomes necessary. Working longer is great, but relying on it is risky.

19. Ignoring Long-Term Care Planning

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Nursing home care and assisted living communities can run into the thousands of dollars per month. Without a plan, these costs can rapidly empty out your savings. Consider long-term care insurance or other types of care before you lose everything.

20. Not Enjoying Your Money

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Being financially responsible doesn’t mean you have to deny yourself. Budget for experiences, travel, and things that make you happy. A balanced financial plan enables you to live life while still ensuring your future.