"A good investment rule of thumb is: 110 – your age = percentage of plan you should have in stocks," says Eric Tyson. "The rest should be in a bond index fund." After age 50, you can take advantage of the 401(k) catch-up provision and add an additional $5,000 to the $15,500 contribution limit. Another way to beef up retirement savings at this point is to consider downsizing your home. "The IRS lets you profit $250,000 ($500,000 if you're married) tax-free from the sale of your house," says Tyson, who suggests putting much of what's left after the purchase of your new home into retirement accounts.
Now is when your attention should begin to include the smartest way to access your savings. At age 591/2, you may begin to withdraw money from your retirement accounts penalty-free. (The IRS requires you to take a minimum annual amount out of your tax-deferred accounts once you reach age 701/2.) Our panel says that one of the big mistakes they see clients make is taking out more money than they'll use in a given year (which means they end up paying income tax on an amount they could have left in a tax-sheltered investment).
You can begin receiving Social Security as early as age 62; the longer you wait (up to age 70), the larger your payment—but there may be advantages to receiving income earlier. Use one of the benefit calculators at SSA.gov to help determine which option is best for you. And as Eric Tyson pointed out, you can always continue to work. "Especially if you enjoy your job, consider retiring at a later age," he says. "You'll get a double benefit: earning and saving for money for more years."