How to build a million-dollar retirement if you're already 50

In BlackRock CEO Larry Fink's annual letter to investors, he highlighted the importance of emergency savings in retirement planning. According to Fink, people with emergency savings are 70% more likely to save for retirement. This suggests that having an emergency fund not only provides a financial safety net for unexpected expenses but also increases the likelihood of an individual being able to save for retirement6.

Emergency savings play a crucial role in preserving retirement funds by reducing the need to tap into long-term savings for short-term financial needs. When individuals lack emergency savings, they often resort to borrowing from their retirement accounts, which can disrupt their long-term financial goals.

In summary, emergency savings serve as a vital buffer that helps safeguard retirement funds against unforeseen short-term financial emergencies. By having a robust emergency fund, individuals can protect their retirement savings and enjoy greater financial stability in their post-employment years.

In 2024, individuals aged 50 or older can contribute up to $30,500 to a 401(k) plan, thanks to the $7,500 catch-up contribution allowed for this age group. Maximizing this contribution can have several benefits, such as:

1. Supercharging retirement savings: Contributing the maximum amount allowed can significantly boost your retirement savings, especially if you start early and maintain consistent contributions.

2. Potential to become a millionaire: With a historical 10% return, contributing $30,500 annually to a 401(k) could make you a millionaire in about 15 years.

3. Tax advantages: Contributions to a 401(k) are made with pre-tax dollars, which can help lower your taxable income and overall tax burden.

4. Employer match: Many employers offer a 401(k) match, which can increase your savings even further. It's essential to contribute enough to take full advantage of this benefit.

5. Compound interest: The more money you contribute to your 401(k), the more you'll benefit from compound interest, allowing your savings to grow exponentially over time.

To make the most of your workplace benefits and reach your retirement goals, it's crucial to assess your current financial situation, explore your workplace benefits, and contribute to individual retirement accounts if possible. Investing in taxable brokerage accounts can also provide additional investment options to grow your savings.