You’ve worked hard your entire life, and suddenly, the walls came crashing down. Whether it’s a job loss or a nasty divorce, many people find themselves at 50 and have no money. But 50 is not too old to start over. There are ways to get back on your financial and emotional feet.
Embracing a fresh start can be a positive opportunity for those starting over at 50, allowing for significant life changes such as career shifts or personal reinventions.
If you are hitting 50 and need to start over, it can be devastating financially, but it can also be horrible emotionally. It’s hard to fix your finances if you can’t get out of bed in the morning. Prioritizing mental health is crucial in coping with such significant life changes.
Work on your finances but work on you as well. There are several ways to reboot your emotions and start living.
Starting over at 50 may be daunting, but fortunately, it’s doable. It might take some planning and discipline, but you can get yourself back on firm financial ground. We’ve found several ways to kick-start your financial recovery at 50. Building a budget is a crucial tool for shaping one's financial future.
If you have a paying job, stay with it while you work toward financial stability. You may hate it, or it may not match your skills very well, but its income and income fixes everything. Consider staying at your old job to maintain financial stability during career transitions, as it allows you to reassess retirement plans and manage funds from previous employment.
The same goes if you lose your job. Take any job you can to bring money in the door. Now is not the time to be picky. Once you settle in and generate some income, you can start focusing on a dream job.
The word budget is a boring word among most people. You know it’s needed, but who wants to take the time to make one, or even stick with one?
Regardless of a person’s age, and especially if you’re starting over, a budget is critical. Keep in mind you wouldn’t take a trip without GPS to get to your destination. A budget is the same principle. You have to have GPS to make the journey to sound finances.
A zero-based budget is essential for predicting financial outcomes and shaping your financial future by ensuring every dollar is allocated a specific purpose.
There are five steps to building a workable budget.
Define what’s important and what you want to achieve.
Write down your consistent monthly income. If you have a job and annuities, write them all down. If you have a small side gig, also write that income down.
Categorize and organize all of your expenses. These include:
You'll also want to write down any variable expenses, like a credit card payment.
Once you have written down the expenses and income, it’s time to form the budget. An option is to use a percentage-based budget to allocate your income. One option is the 50/30/20 rule. This rule works like this.
You can use other formulas, but we find that this one is the easiest to follow.
Ensure you write down all your figures and follow them. If you want to go to a concert but have used your 30 percent "wants" budget for the month, don't go.
Although flexible at times, especially if you have an emergency, a budget won't work if you're not disciplined enough to follow it.
Check back often and regularly update your budget. A good practice is to look at it quarterly. Some people look at it at the end of each month and use it as a report card on how they are financially doing.
Do whatever works for you and keeps you motivated to stick with it.
Once you’ve developed a budget, you’ll be able to analyze your financial life and determine what changes you need to make to live within it. This may mean drastically changing your lifestyle.
It's crucial to prioritize managing your budget while keeping your retirement savings secure for their intended purpose.
Do you have a high mortgage? Maybe you should consider downsizing if you have a large home. If you have children in college, can you continue making their tuition payments?
There may be some hard decisions to make, but they’ll be needed if you want to become financially sound again.
Once you’ve evaluated your financial life, you’ll need to prioritize ways to save. You do this by examining your expenses and determining what you can do without.
You may like or enjoy something, but desperate times call for desperate measures. Look at your lifestyle. You might be paying for items you don’t even use. Some areas you could cut are:
If you live in an area with mass transportation available, consider using it and saving money on gas. Check with your internet provider and see if there’s a less expensive plan that will do the same job.
Look harshly at every expense and determine if you can eliminate it.
You may miss streaming services or eating out, but tell yourself this doesn’t have to be forever. Cutting back until you get on your feet again isn’t the end of the world. It’s just a hiccup. Making these necessary lifestyle changes can lead to a better life.
In order to build a solid financial foundation, it’s imperative to have money set aside for emergencies.
That way, you’ll not turn to more debt if you have a sudden financial emergency like the refrigerator going out or the AC stopping. Those surprise medical bills could put you under, if you don’t have a fund to turn to.
The rule of thumb is to start by having at least $1,000 in an emergency fund. Then gradually expand that by having a month, six months etc., worth of your salary squirreled away. An emergency fund is essential for securing one's financial future.
Once you have your emergency fund, money can be directed to other financial goals.
If you have debt, start working on it. You can reduce your monthly expenses greatly by reducing your debt. That will give you even more money to save and possibly invest. Paying down debt is especially crucial when dealing with significant life changes, as it can provide financial stability during these transitions.
There are two ways to approach paying off debt: the debt snowball method and the debt avalanche.
The snowball method is eliminating one debt at a time.
While still paying off all your debt, you concentrate on the smallest debt first. You add additional money to pay the smallest debt. Once that's paid off, you apply the money you've been paying to the next biggest debt.
By doing this, you not only eliminate debt, but your payment toward higher debt increases: it snowballs.
This practice takes discipline. For example, if you have a lot of credit card debt and you eliminate the smallest one, don’t use it and run the balance back up again.
For every credit card you pay off, set it aside and don’t use it. If you pay off your car with this method, don’t replace it just because you can.
The snowball method not only eliminates debt, but keeps you motivated as you see your debt decreasing.
The avalanche method is the opposite of the snowball method. It targets the highest debt first. This is often used with high-interest credit cards. You focus on the card with the highest interest rate before tackling the others.
This strategy works well for people who don't need to be motivated by a quick win. They can stay on point and work toward the bigger goal.
Go with the method that works best for your personality and needs.
Don't borrow to help you pay your debt. In other words, don't chase debt with debt. You've had a loss; it's time to adjust your lifestyle, not find ways to maintain it.
It goes back to slashing expenses and readjusting your lifestyle.
If you’re starting over at 50, it’s not just about the money, you could have a broken social life for networking. This is especially true if you’re starting over in a new job or area. A strong support network is crucial in stabilizing your life during such significant transitions.
Don’t withdraw; now is the time to network and make new friends. Try to find activities that don’t cost money. Even volunteering can bring you a new circle of friends.
If you still have your old network, use them to help you start again.
If you work for a company that matches 401 (k) contributions, that’s free money.
You may not be able to contribute a lot to your 401 (k), but at least contribute what your employer does. If they match six percent, you contribute six percent. That way you'll have six percent and be on the way to saving for your retirement.
You may also qualify for some senior discounts. Don’t be so vain that you don’t speak up when they’re offered. Even if you’re not yet old enough, be aware of then and grab them when your are.
Don’t forget your retirement plan. Do not stop contributing to it. Even if it’s just a few bucks a month, keep it going. You’ll lose in the long run if you don’t.
If you have the cash flow, take advantage of catch-up contributions.
There’s a fixed amount you can contribute pre-tax per year. For 2024 that amount is $23,000. But if you’re 50 or over you can increase that amount by $7,500.
If you don’t have enough income to cover your basic bills, consider a side gig. You could work for someone or start your own business. Starting a new career can also be a fulfilling and financially secure option for those starting over at 50.
Some side gigs you could do are:
If you have a hobby you don’t want to do without, turn that into a side hustle and start bringing in revenue.
Don’t forget your current job. There’s nothing wrong with asking for extra hours or a raise.
You’ve had a tremendous loss. Your financial life, as you know it and planned for years, is over. Whether you’ve lost your job or been through a divorce, you’re probably mourning your past life.
Take the time to grieve and reflect. Then, start planning the next phase of your life. This can lead to a new life filled with opportunities.
If you must take on a new job, be aware that you were hired for a reason. You’re vulnerable right now, so you may let self-doubt about your capabilities enter your head.
This is especially the case if you're working among many younger people. This is what is called imposter syndrome. You have experience, and you know what you're doing. Don’t succumb to imposter syndrome in your old or new job.
Think about the things that make you feel passion. Be it in your job or personal life, imagine the person that you want to be and work toward that.
Do you have children or a loving partner? Switch your focus to them rather than what you lost.
Set some personal goals that point you to what you love to do or feel.
We’ve covered a lot about starting over financially at 50. It can be devasting both financially and emotionally. So if you have additional questions, we understand. Here are the most frequently asked questions.
Is 50 too old to start over?
Fifty is not too old to start over again. Keep in mind no one really starts over. It's just a hiccup in life's road. Start by creating a budget and getting yourself in the right mindset. Keep in mind you still have 15 to 20 years before you retire. That's a lot of time.
Can you start a business at age 50?
You can start a business at 50. Many entrepreneurs start late in life. Some even start a business in their 60s. Remember, you have years of experience to bring to the table.
Can I take Social Security at 50?
You cannot take Social Security at 50 unless you show that you are disabled. The earliest you can take it is 62. But check with Social Security and see what your benefit would be. It will be higher if you wait longer. The amount for full retirement is 67, but you will receive more if you wait until 70. It ultimately depends on your needs and health.
Starting over financially at 50 is a challenge. You not only have to worry about building your finances back up but there is the emotional toil that comes with the loss. However, starting over at 50 can lead to a significant life filled with new opportunities.
Re-evaluate your financial goals. Develop a budget to set you on the right road to meet those goals. When you have your budget, determine what expenses you can live without and then do it.
Look into your emotions and make goals. Get out of the house and make new friends or read a good book. If you have a new job, don’t psych yourself out with imposter syndrome.
Regardless if you stay at your current job or move on to another, take the time to educate yourself to make yourself more indispensable.
