Saving for retirement at 50: Why it’s not too late

“Re-assessing or building a retirement plan at the age of 50 makes perfect sense and there are lots of options out there that offer better returns than bank-based savings accounts – from additional contributions to IFISAs.”

Frazer Fearnhead, founder of The House Crowd and author of The Alternative Guide To Property Investment.

Saving for retirement from your mid-twenties is often posited as a strategy that’s suitable to one and all, but it simply isn’t possible for everyone. So if you’re only starting to think about saving for retirement at 50 years old, you’re not alone or too late! If you choose the right investments, saving for retirement at 50 can be very rewarding and worthwhile.

For many, only at the very beginnings of middle age does investment become a very real means of preparing for retirement. Research dictates that for most, wages peak in their mid-40s and 50s. This combined with lower mortgage amounts to pay off (or no mortgage left at all) and children leaving home means that many in this age range also start to experience less of a financial commitment.

So, it is certainly feasible to start planning for retirement at 50. But how do you go about it?

How to start planning for retirement at 50

A figure calculated by pensions firm Quilter found that a 50 year old with a salary of £70,000 would be able to build a pension worth £985,000 by the age of 67 if they contributed the maximum amount allowed each and every year.

This figure was calculated on the assumption of an annual return of four percent (after charges) and that the state pension’s “annual allowance” remains at its current level of £40,000 a year. Even if annual returns were three percent lower than anticipated, the pot would still be worth in the region of £744,000 by the age of 67.

Saving this amount of money each year may at first seem implausible but it’s important to bear in mind that this figure takes into account the tax relief that is accredited to all pension savings. So, for instance, someone who earns £70,000 a year would only really have to contribute approximately £27,000 of their annual income to make the total amount of money up to £40,000 to then add it to their pension pot.

The best retirement strategy for a 50 year old

Now £744,000 is a fair old amount of money, but there’s always the potential to earn more.

When you invest with our IF ISA for example, you could earn seven percent p.a. through investing in secured property development loans and bridging loans. You can invest up to £20,000 in a tax-free wrapper and benefit from the diversification of our automated investment service.

Whilst it’s true that the risk associated with IF ISAs and traditional property investment is in general is higher than your traditional cash ISA, they offer investors the potential to earn bank-busting rates that provide an extra cash-cushion when preparing for retirement.

What if I already have capital invested in an ISA?

No problem. With traditional financial institutions continuing to deliver poor returns each year, many people are looking for better ways to provide for their future.

That’s where we come in. When you transfer your existing ISA to The House Crowd’s IFISA, you can earn a target interest rate of seven percent p.a. tax-free and benefit from a diversified loan portfolio secured against UK property. Furthermore, when you transfer an ISA worth £5,000+ to The House Crowd, it’s completely free!

Sick of settling for less? Complete your registration and apply for our IF ISA today.

Capital is at risk and rates are not guaranteed. Withdrawals may be restricted due to illiquidity. Investments are not covered by the Financial Services Compensation Scheme (FSCS). Please read our full risk warning.