What is the Best Investment for a 50+ Year Old?

When you pass 50, something shifts. I remember the exact moment I realized I wasn’t just “planning for retirement someday” anymore; I was legitimately within striking distance of it.

That changes everything about how you think about money, risk, and what you’re actually trying to accomplish with your investments.

There’s really no single “best” investment for someone at 50+. I know that’s frustrating to hear, but it’s honestly the most accurate answer I can give you.

What works brilliantly for your neighbor might be completely wrong for you, depending on your financial situation, savings, health, and the kind of lifestyle you’re hoping to have in your 60s and beyond.

That said, there are absolutely some investment approaches that tend to work better than others once you’re in this stage of life. The key is understanding that you’re in what I call the “critical zone”, you have enough time to still grow your wealth meaningfully, but not enough time to recover from major mistakes or market crashes without it affecting your quality of life.

Understanding Your Investment Timeline at 50

The first thing you need to wrap your head around is that 50-something isn’t what it used to be. You’re not “old” by any stretch, and you probably have a good 15-20 years before you even think about fully retiring, maybe more.

That’s actually a pretty substantial timeline for investment purposes.

I’ve seen too many people make the mistake of getting overly conservative at 50, thinking they need to dump everything into bonds and cash because they’re “almost retired.” That’s a costly error. If you’ve got 15 years until retirement and you might live another 30-40 years after that, you’re actually investing for a 45-55 year time horizon in some ways.

You still need growth, just not at the expense of stability.

The old rule of thumb was to subtract your age from 100 to get your stock allocation percentage. So, at 50, that would be 50% stocks, 50% bonds.

Honestly, that formula is pretty outdated now that we’re all living longer and facing more inflation pressure.

A better modern approach might be 110 minus your age, which would put you at 60-70% stocks at age 50.

But here’s where it gets really personal. If you started saving late and have not accumulated much yet, you might need to take on a bit more risk to catch up.

Conversely, if you’ve been diligent and already have a solid nest egg that will comfortably support your retirement, you can afford to be more conservative and protect what you’ve built.

Maximizing Tax-Advantaged Accounts

This is probably the single most important strategy for someone at 50+. The IRS actually gives you a massive gift right at this age: catch-up contributions.

Once you turn 50, you can contribute significantly more to your retirement accounts than younger people can.

For 2024, the regular 401k contribution limit was $23,000, but if you’re 50 or older, you can add an extra $7,500 for a total of $30,500. That’s seriously substantial.

If you’re married and both of you are over 50, you could be socking away $61,000 per year into 401k’s alone.

That’s before we even talk about IRAs, where you get an extra $1,000 catch-up contribution on top of the standard $7,000 limit.

I really cannot overstate how powerful this is. If you can max out these contributions for the next 15 years until 65, you’re looking at hundreds of thousands of dollars in extra retirement savings, plus all the compound growth on that money.

And it’s all tax-deferred or tax-free growth, which means more of your money is actually working for you instead of going to taxes each year.

The Roth IRA strategy becomes particularly interesting at 50. If you expect to be in a similar or higher tax bracket in retirement, which many people surprisingly are, contributing to a Roth or doing Roth conversions now can save you substantial money down the line.

You pay taxes on the money now, but then it grows tax-free forever, and you never pay taxes on withdrawals. That can be absolutely golden if tax rates rise in the future, which seems increasingly likely given government debt levels.

Building a Balanced Core Portfolio

For most 50+ year-olds, the foundation of their investment strategy should be a well-diversified portfolio that balances growth with stability. This isn’t exciting, but it’s effective, and at this stage of life, effective beats exciting every single time.

A solid core might consist of 60-70% in stock index funds or ETFs that track broad market indexes. I’m talking about funds that track the total US stock market or the S&P 500.

These give you exposure to hundreds or thousands of companies, spreading your risk across the entire economy.

The expense ratios on these funds are incredibly low now, often under 0.10% annually, which means you’re keeping more of your returns.

The remaining 30-40% should probably be in bonds and more stable investments. But here’s where you need to be thoughtful.

Not all bonds are created equal, especially in different interest rate environments.

A mix of short-term, intermediate-term, and long-term bonds gives you some protection no matter what happens with interest rates. Treasury inflation-protected securities, or TIPS, are particularly valuable right now because they adjust with inflation, protecting your purchasing power.

Target-date funds can actually be a really smart choice at 50+ if you don’t want to manage the allocation yourself. You pick the fund that corresponds with your planned retirement year, like a 2035 or 2040 fund if you’re planning to retire around 65-70, and the fund automatically adjusts its allocation over time, getting more conservative as you approach that date.

The newer target-date funds are pretty sophisticated about their glide paths and can help you avoid making emotional decisions during market volatility.

Dividend-Paying Stocks for Income and Growth

This is where things get interesting and where you can actually start building a secondary income stream that might help you transition into semi-retirement or just give you more breathing room financially.

Dividend-paying stocks from established companies, what people call blue-chip stocks, offer you the best of both worlds. You get the potential for price appreciation like any stock, but you also get regular quarterly payments just for holding the stock.

Companies like Johnson & Johnson, Procter & Gamble, and Coca-Cola, among others, have been paying and increasing dividends for decades.

What I really love about dividend stocks at this age is the psychological aspect. When the market drops, which it inevitably does, you’re still getting those dividend payments deposited into your account.

It makes it much easier to stay invested and not panic-sell when you’re seeing tangible returns even during market downturns.

You can build a dividend portfolio directly by buying individual stocks, but that takes research and monitoring. A simpler approach is dividend-focused ETFs or mutual funds that hold dozens of dividend-paying companies.

Look for funds that focus on “dividend aristocrats”, companies that have increased their dividends for 25+ consecutive years.

That track record of increasing payouts shows real financial strength.

The yield on dividend stocks typically ranges from about 2% to 5% annually. That might not sound like much compared to the total return of growth stocks, but remember, you’re getting that money whether the stock price goes up or down.

Historically, dividend-paying stocks have outperformed non-dividend-paying stocks over long periods while being less volatile.

That’s a really attractive combination at 50-something.

Real Estate Investment Options

Real estate deserves serious consideration at 50+, but probably not in the way you might think. Actually, buying rental properties can be a solid investment, but it’s also work; you become a landlord, dealing with tenants, maintenance, and middle-of-the-night toilet emergencies.

Some people love that hands-on involvement and find it rewarding, but it’s not passive income by any stretch of the imagination.

If you’re interested in real estate exposure without the hassle, Real Estate Investment Trusts (REITs) are definitely worth exploring. These are companies that own and operate income-producing real estate, apartment buildings, shopping centers, office buildings, warehouses, and more.

They’re required by law to pay out 90% of their taxable income as dividends, which means they typically offer yields substantially higher than regular stocks, often in the 3-6% range.

You get diversification across multiple properties and property types, professional management, and liquidity; you can sell REIT shares just like stocks. The downside is that REITs can be volatile and sensitive to interest rate changes, so you don’t want your entire portfolio in them.

But as part of a balanced approach, they add diversification because real estate doesn’t always move in sync with stocks and bonds.

If you do have the capital and interest for actual rental properties, there are some really compelling reasons to consider it at 50+. You can potentially pay off the mortgage by retirement, giving you rental income in your 60s and 70s.

The property likely appreciates over time, and you get significant tax advantages through depreciation deductions.

Just be really honest with yourself about whether you want to take on the responsibilities or hire a property manager, which cuts into your returns but saves you the headaches.

Health Savings Accounts as a Retirement Vehicle

This is probably the most underutilized investment strategy I see among people in their 50s and beyond. If you have a high-deductible health plan, you’re eligible for a Health Savings Account, and these things are absolute gold for retirement planning.

HSAs have a triple tax advantage that actually beats even Roth IRAs. Your contributions are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.

That’s three layers of tax savings.

No other account gives you that.

Here’s the strategy that really smart people use: max out your HSA contributions every year. For 2024, that was $4,150 for individuals or $8,300 for families, plus a $1,000 catch-up contribution if you’re 55 or older. Then don’t touch that money.

Pay your current medical expenses out of pocket if you can afford to, and let the HSA grow.

You can invest HSA money just like a retirement account, putting it in index funds, stocks, bonds, whatever you want. It grows tax-free for years or decades.

Then in retirement, you use it for medical expenses, which you’re absolutely going to have, completely tax-free.

And here’s a kicker: after age 65, you can actually withdraw HSA money for non-medical expenses without penalty. You just pay ordinary income tax on it, making it function exactly like a traditional IRA, but with the bonus that medical withdrawals stay tax-free.

Given that healthcare costs are one of the biggest expenses in retirement, building up a substantial HSA balance in your 50s and 60s can provide enormous financial security and flexibility later on.

Creating Additional Income Streams Before Retirement

At 50, you’ve got hopefully 10-20 years of peak earning potential left, and this is the time to think beyond just accumulating assets. Creating additional income streams can dramatically improve your financial security and give you options for semi-retirement or early retirement, if you want them.

The skills and expertise you’ve built over your career are genuinely valuable. Consulting or freelancing in your field can generate substantial income, often at higher hourly rates than your regular job, because clients are paying for your specific expertise without the overhead of a full-time employee.

The beauty of this is you can start building these relationships while you’re still working full-time, then transition to consulting more as you approach retirement age.

Online businesses have become increasingly accessible, and while I’m not going to pretend it’s easy or that everyone succeeds, the barriers to entry are lower than ever. Whether it’s creating and selling digital products related to your expertise, starting a niche e-commerce store, or building content platforms, these ventures can generate income that continues into retirement and doesn’t need the physical demands of a traditional job.

I’m not suggesting you should chase get-rich-quick schemes or neglect your primary career. But dedicating even 5-10 hours a week to building an extra income stream in your 50s can compound into something really meaningful by the time you’re 60 or 65, giving you significantly more financial flexibility and security.

Adjusting Risk as You Approach Retirement

The investment strategy that works at 50 needs to evolve as you get closer to actually needing the money. This is where a lot of people mess up: either they stay too aggressive for too long and get caught in a market crash right before retirement, or they get too conservative too early and miss out on years of growth.

A smart approach is to think about your money in different buckets based on when you’ll need it. Money you’ll need in the next 1-3 years should be very safe, high-yield savings accounts, money market funds, or short-term CDs.

This is your emergency fund and immediate-needs money.

You cannot afford to lose 20% of this money in a market correction.

Money you’ll need in 3-10 years can be moderately invested, with 40-50% in stocks and the rest in bonds and other more stable investments. This gives you some growth potential and protection if markets are rough when you need to access it.

Money you won’t need for 10+ years can still be invested fairly aggressively, maybe 70-80% in stocks, because you have time to ride out market volatility. Even at 50, some of your money won’t be needed for 30+ years.

That money should still be working hard for you.

As you move through your 50s toward 60, you gradually shift money from the aggressive bucket to the moderate bucket, and from the moderate bucket to the safe bucket. This systematic de-risking means you’re not making drastic changes based on how you’re feeling or what the market did last week.

You’re following a plan.

The bond tent strategy is particularly smart for the years immediately before and after retirement. You increase your bond allocation significantly in the five years before and after retirement, protecting yourself during the most vulnerable period.

Then you can actually increase stock exposure again in your late 60s and early 70s once you’ve navigated that risky transition period.

Protecting What You’ve Built

At 50, you’re shifting from pure accumulation to also thinking about protection. You’ve spent decades building wealth, and you really don’t want a single catastrophic event to wipe it out.

Adequate insurance becomes increasingly important. Long-term disability insurance is critical if you’re still working, because an injury or illness that prevents you from working in your 50s or early 60s can be financially devastating.

You haven’t quite reached the retirement safety net yet, but you’re also at an age where health issues become more common.

Long-term care insurance is worth evaluating in your 50s, before health issues make it prohibitively expensive or impossible to get. The policies aren’t cheap, but a long-term care event, nursing home, or home healthcare for extended periods can drain hundreds of thousands of dollars from your retirement savings.

Having insurance coverage, even for part of that cost, can protect your nest egg.

Estate planning isn’t just for the wealthy. Making sure you have updated beneficiaries on all accounts, a proper will, powers of attorney for healthcare and finances, and, if applicable, a trust, ensures your assets go where you want them to go and that someone you trust can make decisions if you’re incapacitated.

Asset location, meaning which types of investments you hold in which types of accounts, becomes increasingly important as your account balances grow. Generally, you want investments that generate a lot of taxable income, like bonds or REITs, in tax-advantaged accounts.

Investments that are more tax-efficient, such as index funds that rarely distribute capital gains, can go into taxable accounts.

This optimization can save you thousands in taxes annually.

Common Investment Mistakes to Avoid in Your 50s

I’ve seen enough people mess this up to know the patterns, and honestly, the mistakes at this age are often more costly because you have less time to recover from them.

The biggest mistake is getting too conservative too soon. I mentioned this earlier, but it really bears repeating.

Moving entirely to bonds and cash at 50 or 55 because you’re “being safe” virtually guarantees you’ll run out of money in retirement or have to dramatically reduce your lifestyle.

With inflation running 3-4% annually, conservative investments barely keep pace, meaning you’re not growing your wealth at all.

The flip side, staying too aggressive too long, is equally dangerous. If you’re 100% in stocks at 63 and the market drops 35%, and you need to start drawing down that money at 65, you’ve just locked in those losses.

You won’t have time for the market to fully recover before you’re depleting the account.

That can turn a comfortable retirement into a stressed one very quickly.

Chasing performance is particularly tempting and dangerous in your 50s. You see friends bragging about the 40% return they got on some hot stock, and you feel like you’re falling behind with your boring index funds.

But chasing last year’s winners is one of the most reliable ways to lose money.

By the time something has made huge gains and everyone’s talking about it, you’re often buying near the top.

Making emotional decisions during volatility will kill your returns. The market will have significant drops during your 50s and 60s; it’s not a matter of if, but when.

If you panic and sell when everything drops, you turn temporary paper losses into permanent real losses.

The people who get ahead are the ones who stay the course or even buy more when things are scary. That’s genuinely difficult to do, which is why having a plan and sticking to it matters so much.

Frequently Asked Questions

How much should a 50-year-old have in their 401k?

A general guideline is to save about 6 times your annual salary by age 50. So if you earn $75,000 per year, you should aim to save roughly $450,000 for retirement.

However, this varies significantly based on when you started saving, your retirement goals, and your expected Social Security benefits.

If you’re behind this benchmark, don’t panic. Focus on maximizing your catch-up contributions and reducing expenses where possible.

Can I retire at 60 with $500,000?

Whether you can retire at 60 with $500,000 depends heavily on your expected expenses and other income sources. Using the 4% withdrawal rule, $500,000 would provide about $20,000 annually.

If you have Social Security, a pension, or other income streams, this might work.

If you’re planning to live solely on this amount, you’ll need to be very careful with your budget or consider working part-time to supplement your income.

Should I invest in a Roth IRA at age 50?

Investing in a Roth IRA at 50 can be an excellent move, especially if you expect to be in the same or higher tax bracket in retirement. You pay taxes on contributions now, but qualified withdrawals in retirement are tax-free.

This tax diversification can be valuable.

Plus, Roth IRAs don’t have required minimumdistributions during your lifetime, giving you more control over your withdrawals in retirement.

Are target-date funds good for 50+ year olds?

Target-date funds can be excellent choices for 50+ year-olds who want a hands-off investment approach. These funds automatically adjust their asset allocation to become more conservative as you approach your target retirement date.

They handle rebalancing for you and typically offer good diversification.

Just make sure to check the expense ratios and understand the fund’s glide path, how it shifts from stocks to bonds over time.

How do I catch up on retirement savings after 50?

To catch up on retirement savings after 50, start by maximizing your 401k and IRA contributions, including catch-up contributions. Cut unnecessary expenses and redirect that money to savings.

Consider delaying retirement by a few years, which gives you more time to save and delays when you need to start withdrawing.

Look for ways to increase your income through side work or consulting. Even small increases in your savings rate can make a meaningful difference over 10-15 years.

Should I pay off my mortgage before retiring?

Whether to pay off your mortgage before retiring depends on your interest rate, tax situation, and overall financial picture. If you have a low-interest mortgage (under 4%), you might be better off investing extra money rather than paying off the house early.

However, entering retirement debt-free provides psychological peace of mind and reduces your required monthly income.

Consider your personal comfort level with debt and run the numbers for your specific situation.

What percentage of income should go to retirement at age 50?

At age 50, you should aim to save at least 15-20% of your gross income for retirement, more if you’re behind on savings goals. If you can max out your 401k and IRA contributions, that’s even better.

Remember that any employer match counts toward this percentage.

If saving this much seems impossible, start with what you can and gradually increase your savings rate by 1-2% each year or whenever you get a raise.

Key Takeaways

What is the best investment for a 50+ year old?
The best investment for a 50+ year-old needs a comprehensive approach that balances continued growth with increasing protection as you approach retirement. You have enough time remaining to meaningfully build wealth, but not enough time to recover from major mistakes without consequences.

Maximize tax-advantaged retirement accounts, especially by taking full advantage of catch-up contributions starting at age 50. This gives you immediate tax benefits and tax-advantaged growth for decades.

Build a diversified core portfolio suitable for your timeline and risk tolerance, typically 60-70% stocks and 30-40% bonds at age 50, gradually shifting to a more conservative mix over the next 15 years.

Consider dividend-paying stocks and REITs for income generation that can supplement your retirement income later and help you ride out market volatility psychologically.

Create extra income streams beyond your primary job, leveraging the expertise you’ve built over decades to generate consulting income, freelance work, or business revenue that can continue into retirement.

Adjust your risk systematically as you approach retirement, moving money from aggressive to moderate to conservative buckets based on when you’ll actually need it, rather than making emotional decisions based on market conditions.

Protect what you’ve built with suitable insurance, estate planning, and smart tax strategies that improve the types of investments you hold in which types of accounts.

The decisions you make in your 50s will directly decide your quality of life in your 60s, 70s, and beyond.