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Retirement Countdown: Investing in Your 50s and 60s

If retirement is less than 20 years away, you’re in the transition risk zone. Strategies that worked in the past may now jeopardize your savings. Here are some tips for investing after 50.

By  Duo Tran, CFP®

Key Takeaways

Although your investment time horizon is shorter, with age can come wisdom and maybe more tax-free benefits.

There’s a good chance you’ll live longer than you think, raising the risk of running out of money in retirement.

It’s never too late to start making the most of the time you have left before retiring.

Up to now, you may have made most of your investment decisions with a long time horizon in mind. Because you had time to wait out the markets’ drops, you may have taken on riskier investments that gave you higher growth potential.

But now you’re closer to the actual day you’ll need to withdraw money. What has worked in the past may not give you the results you want going forward.

It’s a good time to revisit your goals—and reset the clock.

Retirement Savings Goals by Ages 50 and 60

How far along should you be with your retirement savings goal? Below are general guidelines. It assumes people will retire at their full retirement age sometime in their 60s. Of course, every investor has his or her own savings and retirement date goals.


Savings Goal
(as a percentage of your annual income)

Savings Checkpoint
(x = your annual income)



6x-8x by age 60


20+% or as much as you can afford

9x-10x by age 67

Explore more: Retirement Tips for Every Age

Are you happy with what you’ve saved up at this point, or do you feel like you’re playing catch-up? Here are some steps to consider when investing for retirement in your 50s and 60s.

Take Advantage of Catch-up Contributions

Although your investment time horizon is shorter, with age can come wisdom—and maybe more tax-free benefits!

Taking advantage of higher contribution limits to tax-advantaged accounts is one of the most significant ways to boost savings and keep the power of compounding working for you in your 50s and 60s.

After making the maximum contribution to retirement accounts, investors over age 50 are generally permitted to make catch-up contributions in some employer-sponsored retirement savings plans, including:

  • 401(k) (other than a SIMPLE 401(k))

  • 403(b)

  • Governmental 457(b)

People in their 50s and 60s can make catch-up individual retirement account (IRA) contributions, too. IRAs can help you save even if you already have a 401(k) or other workplace retirement account. Which IRA is right for you? Get a side-by-side comparison of IRA options.

And remember, contributions to tax-advantaged accounts can decrease current taxable income and maybe lower your tax bracket. The dual benefits of tax deferral and immediate tax savings can have a profound impact on long-term retirement goals.

Planning a retirement budget ahead of time can help you find extra dollars to direct to retirement savings.

Consider HSAs to Boost Retirement Savings

Health savings accounts (HSAs) are often overlooked for retirement savings. However, they offer advantages you won't find anywhere—a triple tax break:

  • Contributions reduce taxable income.

  • Earnings grow tax free.

  • Withdrawals during your working years are tax-exempt if used for qualified medical expenses.

What’s more, you may be able to invest your account balance so it has the opportunity to grow for years until retirement. You’ll need to check the HSA trustee's requirements and available investment options.*

That means when you withdraw money later in life, when medical expenses are typically higher, you may have more cash available to cover medical bills than you originally put into your account. Plus, after age 65, you can use the money on anything, whether it’s a qualified medical expense or not, without penalty.

Find out more about how HSAs work and the benefits of using them for retirement investing.

Resetting Portfolios for the ‘Transition Risk Zone’

Our Multi-Asset Strategies team calls the 20 or so years before retirement the transition risk zone—when it’s more important than ever to prepare for the unexpected.

At this point, investors typically have accumulated most of their wealth. A sudden shock could jeopardize retirement and other savings plans just when there’s the most to lose and the least amount of time to potentially recover from losses.

Reevaluating how you balance risk and reward as you approach and enter retirement should be a key part of your strategy.

Reassess Your Risk Tolerance

Many investors in their 50s and 60s turn their focus to preserving their savings. They might choose a conservative investment approach that includes more bonds for their income and their expectation for less volatility.

Tilting equity investments to high-quality stocks may also help mitigate risks while maintaining some growth potential. These stocks tend to provide steadier performance than more aggressive stocks because they’re less affected by market fluctuations.

Should 60-year-olds invest more aggressively?

When individuals reach the age of 60, some people wonder if they should invest more aggressively. The answer depends on various factors.

If individuals have secured enough savings to support the retirement lifestyle they want, they might set aside some money to invest in riskier options. This would give them the opportunity to achieve higher returns and leave a bigger financial legacy.

Ultimately, the decision of whether 60-year-olds should invest more aggressively depends on their unique circumstances and objectives. Consulting with a financial advisor can provide valuable insights and guidance tailored to specific situations.

Review Your Cash Reserve

We believe everyone should have cash on hand—liquid, accessible money that you can tap if the unexpected occurs. That might be a sudden medical bill or an unexpected home or car repair.

A cash reserve may also help you avoid selling investments during a market downturn for income—incurring a loss instead of being able to wait for the market to potentially recover.

But there’s a downside to holding too much of your retirement nest egg in cash—the loss of growth. Not only do you want growth for the opportunity to build your net worth over time, but you also want it to outpace inflation. If your money is not growing as fast as prices are going up, you’re losing money because your purchasing power has fallen.

How much cash should you hold? Some experts suggest having three to six months' worth of expenses in cash. Others recommend saving for one, two or even three years' worth of expenses. The choice is personal, but the objective is to have enough to cover living expenses for an extended period of time.

Remember Diversification

Diversification is still important to help manage the markets’ ups and downs in the transition risk zone. Having investments in different asset classes helps reduce risk because each asset type reacts differently to market changes.

Diversifying your investments isn’t a guarantee that you won’t lose money, but it may reduce the likelihood that all your investments decline at the same time resulting in a large loss that’s difficult to recover from.

The Risk of Underestimating How Long You Will Live

There is a significant chance that you will live for many years beyond the average, according to the American Academy of Actuaries and Society of Actuaries. Unfortunately, many people fail to account for this when planning for retirement. This puts them at risk of outliving their savings—known as longevity risk.

The Actuaries Longevity Illustrator can help you see the likelihood of how long you might actually live. With this information, you may decide to save more or work longer to reduce the odds of running out of money during your lifetime.

It can also help you develop a sustainable retirement spending plan. Learn how to create a plan for a steady income stream after you stop working, including withdrawal strategies to help make your money last.

Is 50 Too Late to Start Saving for Retirement?

Starting to save for retirement at the age of 50 may not be ideal, but it is never too late to start contributing to your future financial security. While it would have been advantageous to begin saving earlier, there are still steps you can take to build a retirement fund to supplement Social Security and other benefits.

At this stage, it is crucial to evaluate your current financial situation and set realistic goals. You’ll need to review your expenses and identify areas where you can cut back and save more. This might involve making adjustments to your current lifestyle or finding ways to generate additional income to devote toward retirement.

Consider working with a financial advisor who can help you develop a plan based on your individual circumstances and objectives—and make the most of the time you have left before retiring.

Financial Consultant Duo Tran, CFP®
Duo Tran, CFP®

Financial Consultant

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Performance of investments such as stocks can be volatile. Remember the importance of having enough funds to meet your medical needs before considering investing additional funds that may benefit from an extended time frame.

Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.

Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

Diversification does not assure a profit nor does it protect against loss of principal.

IRA investment earnings are not taxed. Depending on the type of IRA and certain other factors, these earnings, as well as the original contributions, may be taxed at your ordinary income tax rate upon withdrawal. A 10% penalty may be imposed for early withdrawal before age 59½.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.