Top 10 Money Skills To Learn in Your 50s and 60s

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Ridofranz / iStock.com

Ridofranz / iStock.com

You’re not ready to leave the workforce yet, but retirement is on your mind. When you do set off into your golden years, you want to make sure you have the money to enjoy yourself.

The average expected retirement age among non-retirees is 66 years old, according to Gallup. This is a notable increase from 1995, when people expected to retire at age 60.

Retiring later means you’ll have more time to save money, but it’s important to stay focused on that. By age 50-54, the average American has $146,068.38 in retirement savings , according to 2019-2020 Federal Reserve SCF data. This number rises to $206,819.35 for the 65-69 year-old age group.

Hopefully you’re on track with your retirement savings, but if not, don’t panic. Now is the time to assess your finances and create a plan to get on track if your savings account isn’t where it should be.

During your pre-retirement years, you also need to hone your money skills. Ensuring you’re getting the most from your dollar now and educating yourself on smart money moves for retirement will help you financially prepare to exit the workforce.

GOBankingRates spoke with several financial experts to find out what money skills you need to be sharpening if you are in your 50s or 60s. Keep reading to see what they had to say.

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Paying Off Debt

Brock Westbrook, CFP, manager of advanced markets at Country Financial, said in an ideal scenario you would retire debt-free, but that is not often the case.

Generally speaking, he said your total housing debt shouldn’t exceed 28% of your pre-tax household income and your total overall debt — including household debt — shouldn’t exceed 36% of your pre-tax income.

“If you are already struggling to keep your debt below these percentages, then you are not ready to retire,” he said.

He recommended tackling high-interest debt — i.e., credit cards — first.

“Pay as much as you can while still maintaining minimum payments on the rest of your debts,” he said. “Continue to work your way from high-interest to low-interest debt until you have it paid off.”


“If you have not yet retired and have developed a habit of spending more than you’re earning, then you are not ready to retire,” Westbrook said.

When you’re employed, he said you might think you’ll have the opportunity to make up for bad spending habits by earning more money, but you won’t be able to do that in retirement. Therefore, he said it’s important to get your spending in check now.

“Create a budget that is within your means and stick with it,” he said. “Having a budget doesn’t mean you can’t shop, travel or have hobbies — you just need to account for them.”

Retirement Savings: Here’s How Much Cash Baby Boomers Need To Retire in the Next 5 Years

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Saving for Emergencies

“If your credit card has always been your backup plan for emergency situations, then you are not ready to retire,” Westbrook said. “Have an emergency fund set aside with at least three-to-six months’ worth of expenses saved up.”

He said the money in your emergency fund needs to be readily available.

“The funds need to be liquid, meaning they’re easily converted to cash without tax or penalties,” he said. “Broken refrigerators and leaky roofs happen in retirement too, so make sure you’re prepared to handle them without incurring debt.”

Creating a Tax Strategy

“Look at the tax status of all of your retirement savings and run some projections to see how that’s going to work for you,” said Justin Pritchard, CFP, founder of Approach Financial, Inc. “If you’ve saved everything in pre-tax accounts, you could have issues down the road.”

He said large required minimum distributions — RMDs — could put you in a high tax bracket.

“That high income could cause most of your Social Security to be taxable, and too much income can affect how much you pay for Medicare and private health premiums,” he said.

Therefore, he said it’s important to consider different types of investment options, including a Roth 401(k), backdoor Roth IRA contributions or Roth conversions.

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Understanding Your Retirement Income

Not sure what will drive the level of retirement income you’ll receive in retirement? If this is the case, Pritchard said it’s time to find out.

He recommended getting estimates for any pension payments and Social Security benefits and crunching the numbers, so you’ll know what to expect.

“If you’ve assumed it’ll be much higher, you’ll need to take steps to address any gaps,” he said. “If you assumed it’ll be lower, you may have opportunities to retire earlier.”

Avoiding Scams

“Most people spend their whole lives accumulating wealth,” said Robert Persichitte, CPA, CFP, CFE financial planner and founder of Delagify Financial. “As you get close to retirement, your bigger nest egg becomes an appealing target for scammers.”

In fact, he said this might make you a bigger target for scammers for the first time in your life. If you fall victim to one, he said it can be financially devastating.

“While a scam can be upsetting for a 20-or 30-year-old, they have plenty of time to make up for lost ground,” he said. “Your life will fundamentally change if you are a victim in your 60s — and not for the better.”

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Understanding Your Asset Allocation

“One of the most important money skills in your 50s and 60s is to develop a very good understanding of your asset allocation — i.e., mix of stocks, bonds, and other assets — and how that allocation has performed historically,” said Bryan Minogue, CFP, CFA, founder of Kardinal Financial.

He said this is increasingly important, because you are nearing retirement age, have fewer years left to largely increase your investments and your investment accounts have probably grown notably large.

“Market volatility starts to take on a different meaning when you have a shorter time horizon and larger investment balances,” he said. He added that it’s important to plan ahead for any big risk that could impact your portfolio, as making an emotional decision when you’re stressed could cause you to sell at the wrong time.

Maximizing Retirement Savings

“Confirm you are maximizing your 401(k) deferral with the 55-plus bonus — it won’t be automatically added for you,” said Karen Ogden, CFP, a partner at Envest Asset Management, LCC. “In 2023 you can defer $22,500 to a workplace plan plus $7,500 for 55-plus — [for a] total [of] $30,000.”

She also recommended finding out if your employer offers a Roth 401(k) option.

“For those who will be in unchanged or potentially higher tax brackets in retirement, a Roth is a great way to shield money and income from taxes until your death,” she said. “If you have an established Roth IRA, you will be able to roll any Roth 401(k) balance into the IRA upon retirement foregoing the need to take distributions from the Roth 401(k).”

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Planning for Healthcare Expenses

“Determine whether you can work with a high deductible health plan and if so, maximize your contribution to a Health Savings Account,” Ogden said. “[They are] triple tax advantaged.”

She said an HSA is immediately deducted from your income and the money can be invested and grow tax-free. “Money is not taxable upon withdrawal, as long as it is used for qualified medical expenses,” she said. “Again, your allowable contribution increases when you turn 55.”

Being Strategic With Charitable Giving

“Fund a lifetime of charitable giving in a high tax year with appreciated stock or assets,” Ogden said. “To get a one-time substantial tax deduction — when you can itemize deductions — consider making a large donation to a donor advised fund,” Ogden said.

She said the full amount is deductible the year the fund is established. “Then you can direct when and to whom the donations are distributed over your lifetime.”

This allows you to maximize your money, while doing good with it.

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