Retirement Planning in your 40s and 50s? Catch Up Before Its Too Late

Published May. 13, 2021 Financial Capability and Financial Freedom


1)  Planning for retirement takes time. In fact, it should start from the moment you receive your first paycheck.  However, if you missed this opportunity, there are ways to catch up as described in this blog.

2) Usually, health care eats up a significant amount of your budget. Investing in good health is crucial to wealth creation.  Also, it impacts your happiness and general wellbeing in later years.

3) If you are in your 40s or 50s, you cannot delay planning at some point in the future.  Planning and preparing for it has clearly become urgent.  

4) You need to take time to plan for the rest of your life.  Address the whys and the what-ifs. What factors can impact your income and expenses as you move closer to your retirement date? 

Retirement does not necessarily mean you will have reduced expenses. In fact, retirement is an expense driven season of your life. Longevity can be a blessing but also can be a challenge if your retirement fund will not last long enough until 88 or beyond this age.

Consider the following items that might eat up in your retirement fund.

  • 1) Health care
  • 2) Insurances
  • 3) Your children’s education
  • 4) Taxes
  • 5) Enjoyment
  • 6) Community Participation


The adage, health is wealth cannot be truer than during this time. If you’ve been taking care of yourself and you are generally healthy, a lower health care cost might just be possible in the future. Although maintaining good health such as having an access to a fitness programme, food supplements, dental care, eye care and hearing aids among other things might cost also but not as much as bad health which can cost so much for trips to the emergency or hospitalization expenses, medicines or procedure that may be needed.


Insurance premium goes up with your age even if you are healthy. If you took out insurance early on, there are some living benefits that might expire at age 65 or 75. So, you may consider building up your emergency fund to cover your long-term care.

Your children’s education

If you are supporting your children’s university education, it might be that you are putting off building your retirement fund. You don’t want your children to support you in old age so this is something you may want to discuss with your children.  If they are old enough to support themselves financially, you can give them the opportunity to live out their hopes and aspirations in life and support them morally.


Your income tax might significantly go down as your income drops. However, if you have investments in stocks, mutual fund and real estate among others, you can expect that these financial instruments are taxable.

Stock investment is subject to a 0.6% tax on the gross selling price of the stock every time you sell your shares. If you receive cash dividends from your stocks, that will be subject to a 10% final withholding tax.

Real estate investments whether they generate cash flow or not are also taxable. Rental income is subject to 12 % VAT or 3% tax that is charged by the owner to tenants.

When you sell your property, there’s a list of taxes that you should pay such as:

  1. a)   capital gains tax, 6% of the gross selling price or fair market value of            the property, whichever is higher;
  2. b)   documentary stamps tax, 1.50% on the selling price or fair market value of the property, whichever higher, and
  3. c)    transfer tax, 0.5% to 0.75% of the sales price, zonal value or fair market value, whichever is highest.

Your home where you live is also subject to tax. The property tax is 2% of the assessed value.

Even when you pass on to the next life, all your properties [real estate, savings, stock investments and revocable insurances among others] net of allowance deductions is subject to a 6% estate tax on a decedent’s properties.


Travelling, shopping and eating out with friends are essential activities in retirement. The benefits of these activities boost your overall well-being and happiness.  However, it may eat up a significant amount on your budget.

Also, as people retire, they consider redesigning or remodelling their house to make it more convenient, comfortable and secure in their senior years which can also add to your overall quality of life.

Community Contribution

We experience happiness and find meaning when we contribute our gifts to community projects. You may look forward to creating a platform to share your gifts or to volunteer for your church, public school or to your community which involve good health, time and money.

There’s a wealth of research regarding the favourable impact of volunteering and community work. According to Mayo’s Clinic Health System, a person who is involved in such activities experience positive feeling - from helper’s high, increased trust and social interaction, all of which offer many health benefits.


If you are in your 40’s that means you have 20 years to prepare but if you are in your 50s, it can be a challenge as you barely have 10 years to prepare for your senior years. Either way, you need to seriously plan and save aggressively particularly if you are in your 50s. The next best time for you is now. You need to seriously plan, review your income and expenses and develop a strategy and make sure you implement them and conduct a diligent and regular review so you can keep track of how your strategy is helping you bring you closer to your goals.

  • 1) Plan for the rest of your life

What retirement lifestyle do you envision for yourself and your spouse? After living in the city all your work life, do you cherish moving to the countryside or the rural area? Consider important factors such as your access to support, community, medical care services, banking, broadband, health among others. Do you need to take a long drive to get essential stuff?  What if you cannot drive anymore? Address the Whys and the what-ifs.

  • 2) Income 

If you want to maintain your lifestyle today through retirement, you might consider adding streams of income or increasing your income in your existing job.

Do you see any growth potential in your current work that will likely boost your future income? Do you need to get an additional qualification to help you move up the career ladder and increase your income?

Alternatively, you can think about your life’s passion and how you can monetise them or what skills or experience that you can turn into a product or a service. Probably, you have worked as a chemist. And as a part-time gig, you can work as a consultant in your sector or in the SME sector? Perhaps, you can write how-to manuals or become a lecturer or an educator.

Or maybe the time has come to pursue your passion for cooking and you cannot wait to turn it into a productive activity.

  • 3) Expenses

You may consider cutting back, downgrading or eliminating some items in your budget such as cable, subscriptions, phone plan among others to free up cash so you can redirect them to savings and investment. The sooner that you do it, the more you can save up.

Maybe you are not retiring at 60 or 65 but at 70! Reality check, if you are playing catch up in your 50s, the 20 years ahead of you will give you ample time to prepare. You and your partner or spouse need to invest in good health today not just so you are able to push your retirement at a much later date but it is for your overall wellbeing and happiness.

  • 4) Emergency Fund

Liquidity is crucial in retirement. If your funds are tied up in stocks and other risky financial instruments, you don’t want to cash in if your retirement date falls into an economic turmoil that affected your stock investments. As much as possible, keep at least 2-3 years of your living expenses in the money market or in a bank deposit because this is where you will be dipping your hands in the meanwhile until the market recovers.  You may adjust if you are expecting a government pension.

  • 5) Capital investments today but savings in the future. 

For example, you may think about investing in solar energy. Usually, energy cost is a major expense item in the budget. If you go solar, your budget will definitely drop. Based on studies, utility costs drop by 75 per cent by going solar. Also, solar panels have gone down considerably in the last few years so this is worth looking at.

  • 6) Downsizing

If your kids are all grown up, you might want to consider cutting back significantly by selling your home. You not only reduce your utility bills but you are also releasing the equity of your home.

  • 7) Retire debts

  • Avoid making minimum payments on your credit card. Do not carry a credit card balance. How about a mortgage? It depends.

It’s fine to pay it off if your remaining balance is now just a small amount of the total mortgage or if paying off your mortgage in full will not eat up a significant amount in your retirement savings.

Also, compare the interest in your mortgage vs interest in investment – it might benefit you to pay off a high mortgage interest if it’ll just negate the earnings to be had in a much lower interest investment.

If you are downsizing, paying off your house might not make sense as you will convert your cash into additional equity in your home which is a speculative move as you might not easily be able to sell it quickly.

However, there’s an emotional factor that paying your home can benefit you from such as the feeling of confidence and stability that mortgage is out of the budget in your later years which is good for your health plus it’ll reduce your operating expenses down the road.