Serious Investing for Your 50s (Ages 50-59)

• Investment policy statement: The 50s are where the policy statement gets its first real glide path. Common mistake: Assuming catch-up contributions happen automatically, when the employer plan must allow them and the saver must elect them, so the statement reports a savings rate that never actually occurred.
• Research sleeve: The 50s open the catch-up years: an extra $8,000 on top of the $24,500 401(k) deferral limit and an extra $1,100 on the $7,500 IRA limit. Common mistake: Keeping the sleeve at the same share of the portfolio it had in the 30s, even though the years left to recover from a drawdown have shortened and withdrawals are approaching.
• Concentration management: The 50s shorten the recovery window, which changes what concentration means. Common mistake: Using catch-up contributions to add to the same employer stock already held, which raises one company's weight just as the time available to recover from a decline is getting shorter.
• Tax location: Catch-up rules widen tax-advantaged room from age 50: $8,000 more in a 401(k), $1,100 more in an IRA, and $1,000 more in an HSA from 55. Common mistake: Directing every catch-up dollar to pre-tax accounts without considering that a large traditional balance later produces required distributions and taxable income the owner cannot time.
• Rebalancing: In the 50s rebalancing becomes the mechanism that carries out the glide path, so each pass also lowers equity weight gradually instead of only restoring a fixed target. Common mistake: Moving the whole portfolio to its retirement-year allocation in a single rebalance, which makes the outcome depend on the market level on one date.
• Scenario testing: The 50s are when a 2008-style decline can no longer be treated as a buying opportunity alone, because the years left to recover are limited. Common mistake: Testing a market decline against portfolio value only, without a retirement date, so the result cannot show whether working two more years or saving more changes the outcome.
• Security research: Catch-up rules start at 50: an extra $8,000 on top of the $24,500 401(k) deferral, $1,100 on the $7,500 IRA limit, and $1,000 more in an HSA from 55. Common mistake: Assuming a single-stock thesis has the same room to recover from a mistake that it would have had at 35, when far fewer working years remain to rebuild the loss.
• Exit rules: In the 50s, exits begin to include the move from accumulation to distribution. Common mistake: Rolling a 401(k) into an IRA right after leaving a job at 55, which can give up the Rule of 55 exception that applies only to money still in that employer's plan.

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