15 Biggest Money Mistakes to Avoid in Your 50s

So you’ve joined the 50+ club and entered the glow of late middle age. Congrats, it’s often a splendid stage of life with more financial stability.

You likely have more money now than you did in your 20s. However, that doesn’t mean you’re any the wiser for it. Many folks aged 50+ still make foolish money mistakes that can hamper their retirement and other life goals.

With retirement close in sight, it’s crucial to steer clear of these common money mishaps.

Find Out: 8 must-do things before 60 for a stress-free retirement

1. Putting all your eggs in one basket

Many adults stick all their savings into one vehicle, like their stock market portfolio. For more overall consistency, it’s safer to put your money in a range of different options like CDs, money market accounts, bonds, and annuities.

This diversifies your overall risk and provides a hedge against the volatility of Wall Street.

Do you owe the IRS over $10K? Ask this company to help you eliminate your late tax debt.

2. Not maxing out on your 401(k)

Entering your 50s is like entering the fourth quarter of the big game: It’s make or break time. You could be 10-20 years away from retirement, with plenty of time to boost your retirement fund.

In your 50s, you can take advantage of catch-up contributions. For 2024, the total contribution limit is $30,500.

3. Giving in to lifestyle creep

In your 50s, you’ve probably made some upgrades to your life. This may mean eating at fancy restaurants and indulging in expensive hobbies.

While it’s okay to enjoy some of the finer things, many fifty-somethings have made too many upgrades — ones that are not sustainable in retirement. Now is the time to scale back.

Are you a homeowner? Discover 8 savvy money moves to stretch your budget

4. Withdrawing IRA funds early

There are many big life events happening, and many 50-somethings are tempted to use their retirement to pay for college tuition, weddings, and other milestones.

But dipping in early delivers several financial wallops. First, there’s the additional 10% tax penalty for withdrawals made before age 59 1/2; then, there’s the lost income from compound interest you’re missing out on.

5. Not timing your Social Security withdrawals

Many Americans start withdrawing Social Security benefits early. They begin collecting partial benefits at 62 instead of waiting until the full retirement age (FRA) of 67. By dipping in early, you’ll get 30% less each month.

And by delaying just a few years past FRA — waiting until age 70 — you could get a 24% higher monthly payout.

6. Not talking to a financial planner

All too often, many soon-to-be retirees don’t talk to a financial planner. Often, it’s because they’ve been diligently squirreling away money in their 401(k) for decades.

They’re happy with this scrappy, DIY approach or know they don’t have enough saved and don’t need a financial planner to tell them they’re broke.

Talking to a financial planner is helpful regardless of how bad or bright things look. Studies indicate you could double your returns by having an investment expert in your corner.

7. Overpaying for car insurance

If you’re like most Americans, it’s been a while since you shopped for car insurance. Comparing rates every year to see if you can save on car insurance is smart, especially if you’re in the 50+ club.

8. Underestimating your longevity

Americans are living longer these days, which means their money needs to last longer too. When planning for retirement though, most people underestimate their longevity.

You don’t need to consult a DNA test kit or your physician to come up with an anticipated death date. The Social Security Administration (SSA) has some simple, straightforward calculators you can use to estimate your longevity.

9. Not getting long-term care coverage

According to a government study, 70% of Americans who reach age 65 will need some sort of long-term care. Medicare offers only limited coverage and does not cover home health care or nursing homes.

As there’s a 70% chance you’ll need assistance, purchasing long-term care coverage now can be a wise option.

10. You have debt

High-interest debt plagues Americans of all ages, including those near retirement. Ignoring your debt or just making monthly payments won’t make it go away.

Many solutions exist, including 0% balance transfer credit cards, debt consolidation loans, or working with a consumer agency like National Debt Relief.

11. You have spendy home repairs

Home upkeep is expensive. During your working years, a five-figure repair can be a catastrophe. But during retirement, an electrical or plumbing issue can turn into a total nightmare.

Warranty plans, like Choice Home Warranty, can shield your wallet from these bills. For a small monthly payment, you get 24-hour coverage from a vast network of roofers, plumbers, and other experts.

12. Not embracing your age

Most adults of a certain age (usually anything over 21) don’t relish aging. No one wants to look old, but this vanity isn’t serving your wallet.

Don’t cringe if someone offers you the Early Bird special. In fact, look for all the 50+ discounts you can get. And ‌you can always snag great savings with the AARP. Anyone of any age can join and get deals on air travel, rental cars, restaurants, and more.

13. Overspending on your phone plan

When it comes to phone service, most of us shop at big carriers like T-Mobile or AT&T, pick a plan, and stay forever.

It’s worth renegotiating your subscription or shopping mobile virtual network operator (MVNO) plans like Ting, Tello, and Mint Mobile. These MVNOs offer outstanding coverage at rates starting around $5 a month.

14. Having an outdated estate plan

Many people draft a will once and then let it gather mothballs. But your estate plan, like your car, requires regular maintenance.

Financial planners recommend reviewing your will at least every five years for a tune-up, or possibly even sooner, depending on changing life circumstances.

15. Not taking enough risk

While it sounds counterintuitive, many 50-somethings manage their money too conservatively. They commonly start allocating funds to money market accounts and low-risk bonds.

Although retirement is likely near, death is likely at least thirty years out. With increasing longevity, your money needs to last longer.

Generally, a smarter move is a diversified portfolio that builds wealth over a long horizon, including a mix of conservative investments, ETFs, stocks, and other higher-yield assets.

16. Bottom line

If you’re in your 50s now, you still have time to shed bad money habits and prepare for a financially comfortable retirement.

Consider easing into retirement by shifting your full-time work hours to part-time, consulting, or picking up a side hustle . There are plenty of ways to keep life on budget and interesting.

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).