When it comes to saving for retirement, the laws of mathematics say the earlier you start, the better off you will be. That said, once you hit age 50, you know retirement is right around the corner.  At this stage, you no longer have the benefit of time and may reach an especially critical point.  You recognize the need for some serious and deliberate action to ensure you can retire with some sense of financial security.

Now in your 50s, your children are likely at a point where they’re starting to learn how to be more financially independent.  Careers tend to be a little more secure and fruitful at this point too.  This is an ideal time to become more aggressive about your saving and debt-reduction efforts.  It’s possible that you also have a pretty good idea about some of your retirement goals as well.  More importantly, you still have time to make the necessary adjustments required to get you back on track.

Make catch-up contributions

If you’ve been relying on RRSP contributions to help fund your retirement savings, you’re not alone.  Many Canadians take advantage of RRSPs as part of their retirement savings strategy.  At this stage, it’s important to review how much unused RRSP contribution room you have and consider making some catch-up contributions to fully maximize the contribution room that you have.  The nice bonus here; not only do you make a nice commitment to your financial future, but you’ll also receive a nice dollar-for-dollar deduction on your income taxes for any monies that you contribute.

Don’t forget to also review any employer-sponsored plans that provide you with matching amounts.  Before maximizing your RRSP contributions, you really should consider any matching programs to help you get the most bang for your retirement buck.

Reduce what you spend and pay down debt

While catching up on your savings is not an impossible feat, it will require proper planning and a will to prepare for your future. There are a few options to take your retirement savings to the next level that will have a bigger impact than simply paying off all outstanding debts.

Since the basis of developing a retirement income plan includes identifying expenses that will likely stick with you even after you have stopped earning an income, it’s important to note that reducing or outright eliminating expenses also reduces the amount of retirement income you will need to replace on an annual basis.  This in turn reduces the size of the nest egg you will need to have saved prior to retirement.

Paying off debt and avoiding any new debt may sound pretty simple. However, an aggressive debt payment plan generally includes giving up on some lifestyle luxuries. If you’re reaching the pinnacle of your career, it can be very challenging not to splurge on the house you've always wanted complete with more space than you could ever need or maybe the cottage in the Muskokas or expensive annual exotic vacations.   

However, retirement can be far more enjoyable when the fear of outliving your assets isn't a regular thought on your mind. After all, there is nothing stopping you from renting such a home or cottage every so often to get those life pleasures.  The idea being that you can still enjoy what life has to offer without jeopardizing your future.

Don't fall into the lifestyle creep trap

Lifestyle creep can be your number one enemy when you’re nearing retirement. If you earn a decent income but have trouble saving, two common culprits are the roof over your head and the car(s) in your driveway. These big-ticket items tend to be the key reason why you’re unable to sufficiently prepare for retirement.  When it comes to identifying the root causes of lifestyle creep, this is a great place to start.  Also make sure you look at your consumption of luxury food and services.  This can make a difference as well.

Typically, as you’re approaching your 50’s, you’re in the range of the top end of your earnings potential. In the years that follow, your income will still generally continue to rise with inflation, but you are far less likely to make the exponential leaps in pay that you achieved when you were in the earlier stages of your career.

Given that you have to pay very close attention to your spending in your 50’s, some people tend to fall into the trap of "I deserve" or "I've always wanted" just as they're hitting that earnings peak. This is the tendency to buy the things you've always wanted but couldn't afford up until now.  The key is maintaining a level of sensibility and practicality with your spending.  Make sure to find balance in all of your financial decisions – yes you should enjoy life today but not at the expense of your future.