This article takes a look at the top 5 retirement savings tips for 55-to-64-year-olds. If you wish to check out our detailed analysis on decoding retirement savings, you may go to Top 12 Retirement Savings Tips for 55-to-64-Year-Olds.
5. Invest in a Health Insurance Plan
Insider Money Score: 22
Having a Health Savings Account (HSA) is the best thing you can do for your retirement years. With an HSA, not only will you have money to pay for healthcare costs in retirement but also won’t need to set aside additional funds for your golden years. HSAs offer triple tax advantages—contributions are pre-tax, the funds grow tax-free, and withdrawals for qualified medical expenses are tax-free. This can be a valuable tool for managing healthcare costs in retirement while providing additional financial flexibility. By skillfully managing both saving and spending, and even with a modest rate of return on investments, there exists the potential to gradually increase the value of your account over time.
4. Diversify your investments
Insider Money Score: 24
Another way to boost savings after 55 is to diversify your investments. While the initial years of your career may have been the right time to take bigger risks and go for high-reward investment options, any financial advisor would advise you to do otherwise at this age. One way to diversify your investments is to increase the composition of bonds in your portfolio. By spreading your investments across different asset classes, you can mitigate risk and enhance the potential for long-term growth.
3. Boost your 401(k) contributions
Insider Money Score: 26
Another way you can boost your retirement savings is to fund your retirement accounts to the maximum level. Considering that the ages 55 and above are your peak earning years, you are likely to be in a higher marginal tax bracket now. Moreover, by consistently funding accounts to the maximum allowed limits, you can benefit from compounded growth over time. This strategy harnesses the power of long-term investments, potentially multiplying the initial contributions. Additionally, contributing the maximum amount will allow you to take full advantage of any employer matches or tax benefits associated with retirement accounts.
2. Consult a financial advisor
Insider Money Score: 27
There are abundant ways a financial advisor can help you save for retirement. For instance, they can help you uncover various avenues that can help increase your retirement readiness, all while ensuring your current lifestyle isn’t compromised. A prominent example of this is assisting you in pinpointing tax-advantaged accounts, like Health Savings Accounts (HSAs), and enabling you to contribute funds on a pre-tax basis and experiencing tax-free growth on earnings. They can also ensure that you’re claiming all of your tax credits and deductions to minimize your tax bill.
1. Create an emergency fund
Insider Money Score: 28
The most stressed retirement saving tip is, indeed, to leave all of your retirement savings alone. As discussed earlier, individuals can begin making penalty-free withdrawals after 59 ½ whereas with the IRS Rule of 55, as early as the age of 55. The most ideal solution for this kind of tip is to create an emergency fund to rely on during the tough times. Building a financial safety net ensures that unexpected expenses or emergencies can be covered without depleting your retirement savings. This emergency fund provides a buffer, allowing you to navigate unforeseen circumstances and protect your retirement plan in the process.
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