Your final working years can be exceptionally powerful for building wealth, even more so than you might expect.
You’re likely earning more than ever before. Meanwhile, many expenses have decreased:
- Kids might be financially independent, which means you’re no longer covering their activities, education, or daily living costs (unless you’re in that interesting position of having children later in life)
- Your mortgage may be paid off or substantially reduced
- The daycare bills, family vacations with multiple dependents, and other costs that defined earlier decades often fade into the background
At Team Hewins, we see this transition moment repeatedly with clients, and we know that your 50s offer a powerful opportunity to build wealth and clarify what you want your retirement to really look like. The key is approaching this decade with a fresh perspective, and a willingness to reassess everything with an open mind.
In many ways, this transition stage mirrors when you first started your career, only now you have assets to protect, dependents to consider, and specific goals within reach. But you don’t have to tackle this to-do list alone; we’re here to help you figure out what needs attention and what your options are, from retirement savings and healthcare coverage to estate planning and tax strategy.
How to Build Wealth in Your 50s: Six Areas That Deserve a Fresh Look
When you’re building wealth in your 50s, the planning shifts from accumulation to strategy. It’s not just about what you have, but about understanding what you’ll need, when you’ll need it, and how all the pieces of your financial life work together.
Let’s walk through the key areas we typically want to revisit with you during this pivotal decade.
1. Retirement Savings
One of the first conversations we typically have is about whether your current savings rate still makes sense given your retirement timeline and goals. Together, we look at your actual numbers (not rules of thumb you read online, but your specific situation).
The good news is that your 50s unlocks a few new financial advantages. You’re now eligible for catch-up contributions that can let you save beyond standard limits in your 401(k), IRA, and other retirement vehicles. If our projections show you’d benefit from accelerating savings, this is exactly when those catch-up provisions become valuable.
We also explore whether it makes sense to add savings vehicles beyond your traditional retirement accounts. If your trajectory needs adjustment, your 50s give you meaningful time to course-correct, especially while you’re likely earning more than ever before.
Related: Click here to read “Retirement Plan Contribution Limits: Everything You Need to Know”
2. Estate Planning
Even if we’ve reviewed your estate plan recently, this decade brings changes that can significantly impact what you want your estate plan to accomplish.
Here’s what typically needs a fresh look:
- Beneficiary designations. Are they still aligned with your current family situation and wishes?
- Guardian appointments. If you have younger children, are the designated guardians still the right choice?
- Asset schedules. Your assets have likely grown substantially, and your estate documents need to reflect what you actually own today.
- Healthcare directives and powers of attorney. These may become increasingly important as you and your parents age.
- Trust structures. Do your current trusts still serve their intended purpose, or has your financial situation evolved?
Additionally, changes in estate and tax laws over recent years might create opportunities or considerations we didn’t have when your documents were first created. A comprehensive review now helps ensure everything aligns with both your current wishes and the current legislation.
Related: 5 Strategies: Estate Planning for High Net-Worth Individuals
3. Insurance Coverage
Insurance needs shift in your 50s, often in ways that surprise people. Let’s look at the two areas that typically need reassessment:
- Long-term care coverage. Many people assume Medicare covers long-term care, but it doesn’t! If extended care becomes necessary down the road, how will you pay for it? Do you need a long-term care policy? This is the decade where we have that conversation and understand your options, so you can feel confident in your future health needs.
- Life insurance. That policy you purchased when your kids were young—is it still serving its purpose, or was it really meant for a different life stage? Some policies remain worthwhile; others may no longer make economic sense. We’ll do an honest evaluation together to help you understand what protection you actually need now versus what you’re carrying from an earlier chapter of life.
4. Healthcare Coverage
In our experience, healthcare costs are the number one reason people delay retirement. That often comes down to health insurance gaps between your retirement age and Medicare eligibility. If you’re thinking about retiring at 60 or 63, you’ll need to pay for your own healthcare costs until Medicare eligibility at 65. That gap can cost $4,000 per month or more to cover your family through private insurance.
We recently worked with a client who wanted to retire a year earlier than originally planned. When we ran the numbers, we discovered something important: that final year included $300,000 in income plus healthcare coverage, along with no draws from retirement accounts. The impact of working just one additional year made a significant difference in his retirement security and comfort level, and he completely reconsidered his retirement timeline.
Sometimes one year really does matter. Higher savings, continued growth of existing investments, and delayed withdrawals can combine to create meaningful results. Before making early retirement decisions, we want you to understand what you might be giving up and what you might be gaining.
Questions we’re asking along the way:
- Does your company allow you to extend your plan for a period after retirement?
- Would you want a private plan to supplement Medicare when you do become eligible?
- Could you potentially transition to consulting work that maintains health benefits?
These choices require research and planning, and we’re here to help you think through what makes the most sense for your timeline and goals.
Related: Click here to read “Leaving Corporate America: Deciding What’s Next for Your Life and Wealth”
5. Social Security and Medicare
Your 50s are the perfect time to really dig into how Social Security and Medicare work beyond the basics, including the strategic decisions that could significantly impact your retirement income:
- When should you begin taking Social Security?
- How do different claiming ages affect your lifetime benefits?
- What does Medicare actually cover, and what doesn’t it cover?
- How might a private supplemental plan fit into your healthcare strategy?
Many people reach this decade with only a vague understanding of these programs (and that’s completely normal!). We’re here to help you understand the details, so you can make informed decisions about retirement timing and income planning. These aren’t one-size-fits-all programs, and the right strategy depends on your specific situation, health, other income sources, and goals.
6. Tax Strategy for Retirement: Minimizing Lifetime Liability
Building wealth in your 50s isn’t just about accumulation; it’s about efficiency. You know we already look at tax-efficient strategies throughout the year, but your 50s open up specific opportunities we want to make sure we’re capturing.
We usually begin by evaluating strategies like Roth conversions, timing of income recognition, and coordination between different account types to minimize your lifetime tax burden. The goal is to position you now, while you still have earning years ahead and flexibility in how your assets are structured, so you’re keeping more of what you’ve worked for both today and throughout retirement.
Don’t Forget the Most Important Asset: You
While we’re focused on financial planning, your 50s are also the ideal time to focus on your physical health. Building wealth means a lot less if you can’t enjoy a long, active retirement. Regular exercise, preventive care, and healthy habits now set the foundation for the retirement lifestyle you’re envisioning, and they’re often included in our conversations.
The key is having the cash flow to cover out-of-pocket expenses without tapping into your HSA now. If you can swing it, this strategy can be a game-changer.
Your 50s Deserve a Strategic Approach (And We’re Ready)
The numbers don’t lie. Sometimes they tell us exactly what we hoped to hear; other times they reveal opportunities to strengthen your position. Either way, looking at reality with clear eyes gives you the confidence to move forward with a solid plan.
If you’re entering your 50s or already in this pivotal decade, you’re at exactly the right time to take a comprehensive look at where you stand and where you’re headed. We’ll work together to examine your income sources now and in retirement, clarify your expenses today and what they’ll look like when you’re no longer working, and help ensure we’re strategically planning across all the key areas.
This transition decade is significant, and we’re here as your partner through it. Reach out anytime you want to dig into your comprehensive 50s financial refresh. Our team is always available to run updated scenarios, talk through your options, and help make sure you feel confident about the path ahead.
If you’re not yet a Team Hewins client, we invite you to learn more about our approach to comprehensive financial planning in a complimentary Big Decision Clarity meeting. Let’s take a fresh look at your situation and create a clear path forward for this important decade.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.