The Biggest Money Mistakes People Make in Their 50s
Written by
John Csiszar
Edited by
Levi Leidy
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People in their 50s are usually in their highest-earning years, giving them a great opportunity to significantly boost their retirement savings. Unfortunately, those who don’t leverage this time might find that retirement sneaks up on them faster than they imagined.
Here are some very common money mistakes that people make in their 50s that you want to avoid.
Spending Money on Discretionary Expenses Instead of Savings
Lifestyle creep is always a risk for savers, but it can be particularly damaging in your 50s. At that age, income typically peaks and expenses can often decline. If you have paid off your mortgage, for example, or if you have children that move out of the house, you might find yourself in the enviable position of having a lot of discretionary income in your budget.
Unfortunately, with that opportunity often comes temptation. If you spend that excess money on sports cars, vacation homes, fancy restaurants and global travel, you might end up with even less money in your pocket than you had in your 40s.
The cure: Before spending your money on “wants” instead of “needs,” think about how it will affect your retirement lifestyle. If it’s going to diminish your future quality of life, it’s a sign that you might want to dial down your spending.
Taking On Debt Instead of Paying It Down
Even worse than spending all your money in your 50s is spending more than you have. Ideally, you want to use your peak spending years to pay down your debt so that you don’t have to deal with it while living on a fixed income in retirement. Unfortunately, many people make the mistake of adopting lavish lifestyles in their 50s instead of saving for the future.
According to the Federal Reserve, Americans in their 50s now hold more debt in the form of mortgages, auto loans and credit cards than previous generations did at the same age. This is a warning sign that spending often ramps up for people in their 50s.
The cure: Remember, debt increases financial stress and reduces retirement flexibility. While you should certainly be able to enjoy the fruits of your labor, be sure that your spending stays within your budget. You should also use this pre-retirement window to focus on paying off debt before you make extravagant discretionary purchases.
Not Budgeting for Future Healthcare Costs
Underestimating future healthcare needs is a big mistake for Americans in their 50s. Many workers assume that they will remain healthy forever or that Medicare will take care of their needs once they reach age 65. Unfortunately, that’s not the reality.
According to Fidelity Investments, the average 65-year old couple may need over $315,000 to cover medical expenses in retirement — and that’s a figure that doesn’t even include possible long-term care needs. Even if some of your expenses are covered by Medicare, that coverage isn’t free. You’ll still have to pay premiums, meet deductibles and cover any gaps in coverage, much as with private insurance before retirement.
The cure: Take an honest, realistic approach to your potential healthcare needs in retirement. Understand that costs are running rampant and Medicare doesn’t cover everything. Use your peak earning years in your 50s to max out a health savings account (HSA), if you have access to one, or at least boost your retirement plan and emergency fund contributions if an HSA isn’t an option.
Failing To Take Advantage of Catch-Up Contributions
One of the biggest financial gifts the Internal Revenue Service (IRS) offers pre-retirees is the ability to funnel extra money into their retirement accounts. Known as “catch-up” contributions, these are additional amounts you’re allowed to contribute to retirement plans, such as individual retirement accounts (IRAs) or 401(k) plans, once you reach age 50.
For 2026, here’s what you can contribute to an IRA or 401(k) plan, according to the IRS:
- 401(k) standard contribution: $24,500
- 401(k) catch-up contribution: $8,000
- 401(k) total contribution (for ages 50 and up): $32,500
- IRA standard contribution: $7,500
- IRA catch-up contribution: $1,100
- IRA total contribution (for ages 50 and up): $8,600
The cure: As soon as you’re allowed, at age 50, boost your retirement plan contributions as much as possible. Even if you can’t totally max out your accounts, start by raising your contributions by 1% or 2% per year.
Thinking You Can Work Forever
Some pre-retirees feel like they don’t have to worry about their retirement nest egg because they can always work longer to meet their needs. This is a dangerous strategy. Here are just a few of the risks:
- You may lose your job
- You may become physically unable to work
- You may face forced retirement
- You may be discriminated against as an older worker
- You may need to take time off to be a caretaker for your parents or loved ones
- Your skills may be outdated
According to the Employee Benefit Research Institute, roughly half of workers actually end up retiring earlier than expected. In other words, there’s likely a 50/50 chance that you can actually work as long as you want.
The cure: Don’t assume that you can work forever. Remember, the job market is not built around older workers. Sock away all you can while you are earning at your peak so you have enough of a financial cushion to absorb any unpleasant shocks.
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