What Happens If I Don't Have a Retirement Account at Age 50?

If you're 50 and don't have any retirement savings, you are not alone. According to AARP, around 1 in 5 adults aged 50 and over haven't yet set aside any money for their old age. While there's some solace in knowing other people are in the same boat, it doesn't stop it from feeling nerve-wracking.

It isn't an ideal situation, but there's no point in beating yourself up about what's past. What matters is what you do now. It's never too late to start saving, and you've still got a number of working years ahead of you. That gives you time to build up a nest egg.

Step one is to open a retirement account with a top stock broker so you can start building your investment portfolio. Then take the following three steps.

1. Review your spending and financial situation

Sit down with your recent bank statements and look at your spending vs. your income. There are two benefits to taking a close look at your finances. The first is that it will help you find some spare cash that you can use to build your retirement fund.

Let's say you can invest $750 a month for the next 17 years. Assuming an average annual return of 8%, your portfolio might be worth over $300,000 by the time you reach 67.

If you're living paycheck to paycheck, think about what's feasible for you. You may need to make some cuts and/or try to increase your income. If you feel you've already squeezed every spare drop out of your cash flow, it's understandable. Think about what's really essential and be as aggressive as possible -- you'll be grateful for every extra dollar once you stop working.

The other benefit of reviewing your finances is that it will give you an idea of how much life will cost in retirement. A common starting point is to estimate you'll need about 80% of your pre-retirement income once you stop working. Some of that will come from Social Security and other sources.

The rest will need to come from your investments. A financial adviser or retirement calculator can help you map out different scenarios.

2. Make the most of tax-advantaged accounts

Tax-advantaged accounts can make it a little easier to save for retirement. If your work has a 401(k) plan, find out how to get involved and whether it offers any employer contributions. Some companies will match a percentage of what you put in, which is extra money for your golden years.

If a 401(k) isn't an option, think about which IRA would suit you best. Check out our list of the best brokerages for IRAs to find one with low fees and a range of investment options.

Traditional IRA contributions reduce your tax bill today, while a Roth IRA gives you tax breaks further down the line. You put in post-tax dollars and can then make tax-free withdrawals once you've retired. SIMPLE and SEP IRAs are designed for small business owners and freelancers.

The IRS sets limits on how much people can contribute to their IRAs and 401(k)s each year. But if you're over 50, you can make extra catch-up contributions. For example, the maximum most people can contribute to an IRA for 2025 is $7,000. Anyone over 50 can put in an extra $1,000.

If you're in the 24% tax bracket and put $8,000 into a traditional IRA, you might cut your tax bill by $1,920.

3. Consider your options

If you haven't yet been able to build up much in the way of investments or alternative income streams, you may wind up working longer than you'd hoped. Those extra years of income could help you build your nest egg. Not only that, but compound interest would have more time to work in your favor.

There are also benefits to waiting and claiming Social Security a little later in life. Schwab points out that you'll get 30% less in annual benefits if you start taking payments at age 62 compared to 67. If you postpone retirement until you're 70, you might be able to get additional delayed retirement credits.

If you own your home, another option to consider is downsizing. If you can sell and move to a smaller home, you could use any profits you make to boost your portfolio balance. On top of which, you may also reduce your living costs. It's a big decision, but one that could make your money stretch further in retirement.

It's never too late to start saving

There's all kinds of financial advice about how much we should have saved at different stages of our lives. But it's often easier said than done. Factors like medical emergencies, job losses, and other curveballs can throw even the best-laid plans off course.

Try not to get disheartened. Instead, take steps to kick-start your retirement investments today. Work out how much you can invest each month and what tax breaks you're eligible for.