Financial Mistakes to Avoid in Your 50s — and How to Fix Them

Your 50s are a critical window in your financial life. Retirement is on the horizon, but there's still time to strengthen your plan and make meaningful progress. This decade is about playing smart: maximizing savings, minimizing risk, and avoiding missteps that could derail your retirement goals.

Here are the top financial mistakes Canadians make in their 50s — and how to fix them with practical steps.

1. Not Saving Enough for Retirement

Many Canadians in their 50s realize they’re behind on savings — especially after years of prioritizing mortgages, children’s education, or other life costs.

Why It’s a Problem:

  • Less time for compound interest to work in your favour

  • Greater reliance on government programs or reduced lifestyle in retirement

How to Fix It:

  • Calculate your retirement number: Use tools like retirement income calculators to estimate how much you’ll need.

  • Increase contribution rates: Aim to contribute 15–20% of your income toward retirement.

  • Take advantage of RRSP catch-up room: RRSP contribution limit is 18% of your previous year's income, up to a cap ($31,560 for 2024). Unused room carries forward.

  • Max out your TFSA: As of 2024, the total TFSA cumulative room is $95,000 if you’ve never contributed.

  • Use automatic transfers: Set up automatic bi-weekly or monthly contributions to your TFSA or RRSP.

  • Redirect windfalls: Tax refunds, bonuses, or inheritance? Funnel part or all into your retirement accounts.

2. Not Reviewing or Rebalancing Your Investments

In your 50s, your investment strategy should evolve. What worked in your 30s might be too aggressive or volatile as you get closer to retirement.

Why It’s a Problem:

  • Taking on too much risk could lead to losses just before retirement

  • Too conservative a portfolio could hinder necessary growth

How to Fix It:

  • Rebalance annually: Ensure your allocation (e.g., 60% equities / 40% fixed income) still matches your risk tolerance and time horizon.

  • Shift gradually: Start moving toward more conservative, income-producing assets (bonds, dividend stocks, REITs).

  • Add guaranteed income tools: Consider annuities or GIC ladders as part of your income strategy.

  • Stress-test your portfolio: Ask, “What happens if the market drops 20% next year?” Plan accordingly.

  • Consult a financial advisor: They can help tailor your asset mix based on your goals.

3. Ignoring Healthcare Costs in Retirement

While Canada has public healthcare, it doesn’t cover everything, especially in retirement. Failing to plan for these costs can lead to unexpected withdrawals from savings or debt.

Why It’s a Problem:

  • Dental care, vision, prescription drugs, and private/home care are not fully covered

  • Long-term care can be extremely expensive

How to Fix It:

  • Estimate your future health costs: Budget around $5,000–$10,000/year for out-of-pocket health costs depending on your needs.

  • Purchase supplemental health insurance: Compare private plans from companies like Blue Cross or Manulife.

  • Open a dedicated health savings fund: Keep it in a TFSA or high-interest savings account for easy access and tax-free growth.

  • Start preventive care now: Adopt healthy habits, regular checkups, and manage chronic conditions early.

4. Not Having a Clear Retirement Income Plan

Even with good savings, many people don’t have a plan for how to draw income efficiently.

Why It’s a Problem:

  • Without a plan, you could withdraw inefficiently, pay unnecessary tax, or deplete savings too quickly

How to Fix It:

  • Map out your retirement income sources:

    • Government benefits (CPP, OAS)

    • RRSPs (converted to RRIF by 71)

    • TFSAs

    • Employer pensions

    • Non-registered accounts

  • Plan the withdrawal order:

    • Often best to start with taxable accounts (RRSP/RRIF), keep TFSA for tax-free withdrawals later

  • Delay CPP or OAS for higher payouts: Delaying CPP to age 70 can increase payments by up to 42%.

  • Minimize clawbacks: Withdraw strategically to avoid OAS clawbacks (starts at ~$90,000 net income).

5. Carrying Too Much Debt

Credit card balances, lines of credit, or high mortgage payments in your 50s can eat into your savings and delay retirement.

Why It’s a Problem:

  • Interest costs reduce savings ability

  • Debt repayments can continue into retirement, straining income

How to Fix It:

  • List and prioritize your debts: Tackle high-interest debts (e.g., credit cards) first.

  • Accelerate mortgage payments: Increase payment frequency or make lump sum payments annually.

  • Avoid new debt: Think twice before financing new vehicles or renovations in your 50s.

  • Use savings or downsizing to eliminate debt: Consider whether it makes sense to sell assets to pay off debt before retiring.

6. Overlooking Estate Planning

Many Canadians in their 50s don’t have a clear estate plan, which can cause tax inefficiencies, family disputes, or delays in wealth transfer.

Why It’s a Problem:

  • Dying without a will means provincial law decides who gets what

  • You risk leaving behind confusion and stress for loved ones

How to Fix It:

  • Create or update your will: Ensure it reflects your current wishes and family situation

  • Establish Power of Attorney: For both personal care and property

  • Name beneficiaries on all accounts: Especially RRSPs, TFSAs, and insurance policies

  • Consider trusts or tax-efficient strategies: Especially if you own property or a business

Conclusion: Small Fixes, Big Results

Being in your 50s doesn’t mean it’s too late — it means it’s exactly the right time to act. By avoiding these common mistakes and making strategic changes, you’ll gain confidence, security, and freedom in retirement.

Action Plan Recap:

  • Review and increase retirement contributions

  • Rebalance and reassess your portfolio

  • Budget for healthcare

  • Build a detailed withdrawal strategy

  • Eliminate or reduce high-interest debt

  • Get your estate documents in place

Your future self will thank you.

Mike Gomes, CFP