As you enter your 50s, the countdown to retirement becomes more real, and building wealth becomes a priority. It's a time to solidify your financial foundation and ensure you're on track to live comfortably in your golden years.
To help you navigate this crucial period, we’ve gathered advice from experienced investors and entrepreneurs who share their top wealth-building strategies tailored for those in their 50s.
Here are eight strategies to consider as you approach retirement.
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1. Invest in real estate
"Real estate investing is one of the most reliably profitable forms of investing there is. If you are in your 50s and have the funds available to go the traditional investing route of owning investment properties, that is well worth considering," says Seamus Nally, CEO of TurboTenant.
Real estate can provide a steady income stream and appreciate over time, making it a solid option for building long-term wealth. Additionally, property values tend to rise with inflation, offering a hedge against economic downturns.
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2. Try alternative forms of real estate investing
“If you can’t afford that [buying investment properties], consider alternative options like investing in REITs or turning a portion of your home into a short-term rental (like an Airbnb),” Nally adds.
“Getting your foot in the real estate investing door in these ways can help you begin to start making consistent earnings in a relatively passive way.”
Real estate investment trusts (REITs) let you invest in real estate without the need to manage properties directly.
They offer a way to diversify your portfolio and benefit from real estate's potential gains. Short-term rentals could also provide extra income with relatively low effort.
3. Shift your savings priorities
“Most families in their 50s no longer have to worry about saving for college,” says Scott Lieberman, Founder at Touchdown Money. “You can move the money you were saving for that expense toward building wealth and flexibility,”
With major expenses like college tuition behind you, redirecting those funds toward retirement savings or other investments can significantly boost your wealth.
Consider increasing your contributions to retirement accounts or investing in growth-oriented assets.
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4. Start a side hustle
“Starting a side business can be a great way to give yourself some extra cash,” Lieberman adds. “If you put your side hustle money in a stock or mutual fund, that can be an even better way to build wealth.”
A side hustle provides additional income and allows you to explore passions or skills you may not have utilized fully. Investing this extra income can compound your wealth, especially if you start early in your 50s.
5. Take advantage of catch-up contributions
“In your 50s, the amount you can contribute to a 401(k) or IRA increases to allow you to catch up if you haven’t yet been able to save,” Lieberman suggests. “This can make a big difference to the bottom line.”
Catch-up contributions allow you to contribute more to your retirement accounts than the standard limit, giving you a chance to make up for lost time.
This extra savings can grow tax-deferred, enhancing your retirement fund significantly by the time you retire.
6. Be patient
“There are no shortcuts to building wealth. The best thing to do is to realize that the past cannot be changed and max out everything you can,” explains Paul Gabrail, Founder & Host at Everything Money.
Wealth-building is a long-term process that requires discipline and consistency. Focus on maximizing your contributions, making informed investment decisions, and avoiding risky shortcuts that could jeopardize your financial security.
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“If you have enough saved for retirement already, take risk off the table,” Gabrail goes on to say. “Markets can be very volatile, and the last thing you want to do is sacrifice what you have to get something you don’t need.”
As you near retirement, it’s crucial to protect what you've accumulated. Reducing exposure to volatile investments can help preserve your nest egg, ensuring you have the funds to support your retirement lifestyle.
8. Adjust some investments to be more conservative
“You might consider shifting a portion of your investments into more conservative assets like bonds or dividend-paying stocks, which can offer you more steady income and also reduce volatility,” suggests Erika Kullberg, Founder of Erika.com and an attorney and personal finance expert.
Reducing risk by moving some investments into conservative assets as retirement approaches may provide stability. Bonds and dividend-paying stocks could offer a steady income, helping you maintain your lifestyle without taking unnecessary risks.
Bottom line
As you reflect on your financial journey, consider how these strategies can help you get ahead financially and achieve the retirement lifestyle you’ve envisioned.
What steps will you take today to secure your future and create a stress-free retirement ?
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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