How to supercharge your savings in your 40s and 50s

As you approach your 40s or 50s, retirement becomes less of a fantasy and more of an inevitability. Many people begin to reassess the financial plans they have made to ensure they are able to afford their desired lifestyle after their working days are over.

According to a 2024 Transamerica Retirement Survey of Workers, only 16% of Gen X workers (born between 1965 and 1980) feel very confident they'll be able to retire with a comfortable lifestyle. If you're one of the majority, it may help to know that there are tools and strategies you can use today to supercharge your retirement savings and get you closer to a comfortable retirement. 

Takeaways

• Maximize the tax benefits by maximising your catch-up contribution.
• Use HSAs for a stealth retirement plan.
• Consider Roth IRAs as a way to generate tax-free retirement income.
• Technology can be used to enhance retirement planning.
• Consult financial advisors to develop a retirement strategy that is tailored to your needs.

Retirement Savings by Age: A Summary 

There are several benchmarks to determine how much money you will need for a comfortable retiree. Some of the most popular use your annual income and your age as factors. 

For example, Fidelity's guidelines are as follows: 

• Take 30x your salary
• Three times your salary
• 6x your salary multiplied by 50
• 8x your salary divided by 60
• 10x your salary multiplied by 67

Understanding these benchmarks and where you fall compared to similarly aged workers can help you determine whether you're financially prepared for retirement. For comparison, here's a chart of the median savings per generation according to Transamerica's survey. 

Gen Xers have fallen short. For example, if you earn $60,000 annually, the goal according to Fidelity's guidelines would be to have $360,000 saved by age 50. That's almost four times the amount of the median savings for Gen X as a whole. 

This shortfall is likely due to several factors, including three financial crises, COVID-19’s economic challenges, consumer and student debt, and competing priorities. Gen Xers are still able to win despite the challenges they face by increasing their retirement contributions, exploring other income streams, and adjusting their retirement plans. 

Using Catch-Up Contributions

Catch-up contributions, a type retirement savings, are only available to those over 50. The Internal Revenue Service (IRS), allows workers 50 and older to save additional amounts into their tax-advantaged pension accounts, such 401(k)s, traditional or Roth IRAs.

Every year, the IRS reviews the contribution limits and catch-up contributions for available retirement plans.   

The catch-up contribution is a great way to boost your retirement savings. Here are the contribution limitations for 2024 and 2020:

Maximizing health savings accounts (HSAs).

Health savings accounts (HSAs), the underdogs of retirement savings vehicles for Gen Xers, can help them achieve a successful retirement when they are used to their fullest potential. HSAs allow you to save before-tax dollars to pay for medical expenses. 

Hilary Hendershott CFP, president and CEO of Hendershott Wealth Management, said that HSAs offer a triple tax advantage. “You will get a deduction in the year of contribution, you can invest and let it grow tax free, and you will get tax-free withdrawals if you use the account for qualified health expenses.” 

You can also read about the importance of this in

The maximum contribution to HSAs for 2025 is either $8,550 for a family or $4,300 per person. If you’re 55 or older, you may be eligible to contribute an extra $1,000 a year.

HSAs can be a great tool for maximizing benefits. Matching employer contributions is a great way to ensure you never miss out on free money. 

You can also think about the long term when investing. If you don't need to use your HSA for qualified medical expenses in your working years, you can use the money to pay your Medicare premiums. Once you're 65, you can also withdraw your money for non-medical expenses. These withdrawals will be taxed like any other IRA distribution. 

Make a Plan

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Roth IRA Conversions – A Strategic Move

Roth IRA contributions come from after-tax dollars, so withdrawals in retirement are tax-free after age 59½, as long as the account is at least five years old. Roth IRAs do not have required minimum distributions (RMDs) until the account owner dies.

But there's a catch. Roth IRAs only apply to those who earn less than certain amounts each year. The IRS sets income limits every year.

Traditional IRA holders can convert their traditional IRA into a Roth IRA. To convert to a Roth, you will have to pay taxes in the year the conversion is made. The tax-free withdrawals at retirement may still be a net benefit for those who anticipate a higher income tax bracket during retirement.  

Timing Is Key

“A Roth Conversion can be a game changer, if you do so strategically,” said Stoy H., CFP. CEO and Founder at Black Mammoth. “When is the right time?” When your income is lower than usual—maybe you took a sabbatical, switched jobs, or retired early but haven’t tapped into Social Security yet. Converting when you have a low income year allows you to pay taxes at a lower level now, rather than paying higher rates later. 

Tip

Roth conversions are not only a great way to save for retirement, but they can also be used as a tool in estate planning. 

"Another time to consider Roth conversions is if you want to leave tax-free assets to your heirs," said Hendershott. "Occasionally clients state that they would prefer to pay taxes now and do a Roth conversion; paying the taxes on that asset now acts as a gift to their heirs that isn’t included in their annual gift tax exemption or lifetime gift exemption limits." 

Financial advisors urge anyone considering a retirement income conversion to talk to a professional. 

"Roth conversions can be powerful, but only if done with intent," said Hall. "Don't just do it because some TikTok financial guru told you to."

Leveraging Technology and Financial Tool

In an age where most of us have a rectangle with internet capabilities no more than an arm's reach away, tracking our progress toward retirement savings goals and investing is easier than ever—you just have to know where to look.

Technology can be used to boost retirement savings. You may use a budgeting application to track your monthly spending, a robo-advisor to invest or an app that helps you create a financial strategy and stick to it.

Retirement calculators The T Rowe Price Calculator for Retirement Income and MaxiFi Planner are both retirement calculators that let you model various scenarios, change variables and see how they impact your plan. This information will help you decide if your retirement plan is on track or if there are changes you need to make.

Budgeting: Honeydue and You Need A Budget can help you get your finances back on track. These tools allow you to track your expenses and identify opportunities for savings.

Investing: Apps such as Wealthfront, Acorns and Fidelity go, as well as Betterment, allow you to plan and invest for your future in the comfort of your own home, office or favorite coffee shop. 

Maximize your money

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Additional Savings Strategies For Gen X

If you’re one of the many Gen Xers who are worried about their retirement saving, there are a couple of other strategies that can help you maximize your retirement savings.

Diversify your business!

Diversification reduces risks by spreading money out over different financial instruments and asset classes. As you near retirement, you’ll likely reallocate retirement funds to avoid high-risk investments. 

You can also read about the importance of this in

Diversification plays a major role in a long term investing strategy. It is the best way to protect your savings against market volatility. 

Don’t leave money on the table

Employer matches are what many financial professionals call "free money." If your employer provides a matching contribution (usually a percentage of your income), try contributing the required amount to receive the full match. 

"Who said you have to stop working completely at 65? Maybe you start a part-time business, phase into semi retirement, or convert a passion to income. The goal isn’t to stop working; it’s to stop working on things you have to do and start working on things you want to do."

— Stoy Hall is the CEO and founder of Black Mammoth.

Don’t Retire Because You Can

Many people assume that retirement means quitting work completely at 65. But rethinking retirement can help relieve some of the pressure. If you’re in good shape but not financially prepared to retire yet, you can work for a few extra years. This will give you more time for saving and reduce the number years you need to withdraw from your retirement account.

You will receive maximum Social Security payments if you wait until 70. You can receive an extra 24% if you delay taking Social Security past your full retirement (FRA) age.

Protect Your Family & Health

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Don’t let extra money go to waste

Automate your savings or investments to make your extra money work for your benefit without the need for constant decision-making or self-discipline. 

"The next time you get a raise, bonus, or unexpected windfall, automate all—or a portion of it—straight into savings or investments before it even hits your checking account," said Hendershott. "This helps you avoid the sneaky trap of lifestyle creep, where higher earnings lead to higher spending instead of higher savings."

When is it too late to start an IRA?

Contributions to a Roth IRA or a traditional IRA are not age-restricted. To contribute, you need to have income. You will also be required to start taking RMDs out of a traditional IRA once you reach the age of 73. Roths also must be open for a minimum of five years to qualify for tax-free withdrawals.

Is it a good idea to max out retirement contributions?

If you can afford it, it's smart to max out retirement contributions. Tax-advantaged retirement accounts offer long-term growth opportunities. You should only max out your retirement contributions if there is enough cash to cover short-term or emergency needs.

When is the best time to convert my IRA into a Roth IRA?

The best time for you to convert your IRA into a Roth IRA will be when your retirement income and tax brackets are lower than expected.

What Alternative Investments Should I Consider to Diversify My Portfolio?

Alternative investments include commodities (real estate), private equity, hedge fund, cryptocurrency, REITs, collectives, and collectives. These assets will help you diversify away from traditional investments, and reduce your risk by limiting impact of market fluctuations. 

Is there a penality for contributing too much money to a personal retirement account?

You have until the deadline for filing your taxes (normally April 15th) before you can remove any contributions that exceed the contribution limit from your IRA. If you fail to remove the excess funds by the deadline you will have to pay a 6% per year penalty for every year they remain in your IRA.

The Bottom Line

The best time was 20 years back. What’s the second best time? Hall replied, “Right now.” You’re still in the game until and unless you decide otherwise. Retirement isn’t an age—it’s a financial position. You want freedom? “Move.”

If you're in your 40s or 50s and you're behind on your retirement savings, you can reach your goals with the right strategies. Start by maximizing the catch-up contribution, choosing a tax-advantaged retirement account, considering Roth IRAs, and leveraging technologies. 

Consider consulting a financial adviser who can offer personalized insights into your particular situation. 

Article Sources Investopedia asks writers to use primary resources to support their writing. White papers, government statistics, original reporting and interviews with industry professionals are all examples. Where appropriate, we also reference original research by other reputable publishers. Learn more about our standards for producing accurate, unbiased material in our Editorial policy

1. Transamerica Institute for Retirement Studies. "The Multigenerational Workforce: Life, Work, & Retirement." Page 12. 

2. Fidelity Investments. "How Much Do I Need To Retire?" 

3. Transamerica Institute for Retirement Studies. "The Multigenerational Workforce: Life, Work, & Retirement." Pages 10-13. 

4. Internal Revenue Service. "Retirement Topics – Catch-Up Contributions."

5. Internal Revenue Service. "401(K) Limit Increases to $23,500 for 2025, IRA Limit Remains $7,000." 

6. Internal Revenue Service "Rev. Proc. 2024-25."

7. Internal Revenue Service. "Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans." Page 6.

8. Internal Revenue Service. "Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans." Pages 9-10.

9. Internal Revenue Service. "Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)." Pages 31, 35.

10. Internal Revenue Service. "Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)." Page 28.

11. Social Security Administration. "Effect of Early or Delayed Retirement on Retirement Benefits."

12. Internal Revenue Service. "Retirement Topics – IRA Contribution Limits."

13. Internal Revenue Service. "Retirement Plan and IRA Required Minimum Distributions FAQs." 

14. Internal Revenue Service. "Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)." Page 31.

15. Internal Revenue Service. "Retirement Topics – Exceptions to Tax on Early Distributions."

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