Age 50 is too late to start saving for retirement

Age 50 is too late to start saving for retirement

We’ve all heard the same song for some time now:

  • Canadian debt loads are too high.
  • Canadian savings rates are dropping.
  • Canadians expect to work past age 66, not because they want to.

I’ve read a ton of personal finance and investing articles that state “it’s never too late to plan for retirement” or “it’s never too late to save for your future” but I’ve often wondered how much truth there is in that.

Some time ago, I wrote how about unfair it be might to broadly state that 20- and 30-somethings don’t save enough.  

Yes, Gen Y and Gen X should save and invest after they land that first career job but young adults and young families have many conflicting financial priorities.  Any saving is better than nothing, no matter how meagre.  So with those conflicts in mind I ask…when is it too late to start saving for a middle-class retirement?  

I mean, if you haven’t bothered to save barely anything for retirement in your 30s or 40s, is it too late to pay yourself first so you can enjoy your golden years?

My answer might be too blunt for some folks to digest but by age 50:

if you haven’t saved a penny for retirement yet then depending on your middle-class pending needs, kiss your middle-class freedoms goodbye.


Age 50 is too late to start saving for retirement

Here’s why:

  1. If you delay your investment contributions until your 50s, if retirement age is 65, you’ll need to contribute more than 5 times as much to get the same portfolio value as a 20-year-old vs. a 50-year-old; you’ve lost too much compounding time.
  2. If you haven’t paid off your mortgage by retirement, let’s say age 65, you’ll be paying off debt with fixed income in your golden years. As inflation rises and living expenses rise with it, you’ll struggle in a few years to keep up your debt payments.
  3. If you haven’t changed your spending habits in your 30s and 40s, the likelihood you will change your spending habits in your 50s is slim to none. 

I agree in principle, “it’s never too late” to start something in life. 

Age is just is a number in my book. 

Yet if you want a modest retirement comparable to the middle-class freedoms you enjoy today; newer cars every few years, new iPhones, last-minute trips to sunny southern destinations then you better start saving long before age 50. 

Here is the data:

  • A 30-year-old making investments that deliver a 3% yearly return would have to invest $1,400 per month for 35 years to reach $1 million.
  • If they instead contribute to investments that give a 6% yearly return, they would have to invest $740 per month for 35 years to end up with $1 million.
  • But if they choose investments that deliver a 9% yearly return, which is comparably more aggressive and very difficult to achieve, they would need to invest $370 per month for 35 years to reach $1 million.

Compared to those who begin investing at age 25, people closer to age 30 will have to contribute a little more money each month in order to reach the same goal by age 65. 

If you haven’t started saving anything for your retirement, unless you’re on a gold-plated defined benefit pension plan with 25+ years of service, I think age 50 is too late to turn your financial ship around if you want to spend freely in retirement.

The facts are: programs like Old Age Security (OAS), Guaranteed Income Supplement (GIS) and the Canada Pension Plan (CPP) will put food on the table but it won’t provide you with the freedoms you’ve become accustomed to.

Our financial plan has always been to save then spend what is leftover. You might also consider this a far better way to budget too. 

Save a bit now and you’ll have plenty for retirement later. 

What’s your take?  Is age 50 too late to start saving for retirement?

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

37 Responses to "Age 50 is too late to start saving for retirement"

  1. I am 35 looking to start saving slowly and build up wealth for retirement. I need some advice on:

    How much would you recommend I save monthly? I will need three options or scenarios ($100, 200 & 300).

    Where should I be putting this money TSFA, RRSP, normal savings, etc.

    Can I use all these retirement platforms at the same time? I want to diversify my retirement plans.

    I have read all the comments above and one risk is life changes situations. How will divorce affect retirement plans or savings in Canada?

    Sorry for to many questions, I am so confused with all these Canadian retirment options and I need to know.

    Please advice

    1. I can’t offer specific saving or investing advice LastDon but I can comment on my own journey and offer a perspective on yours.

      1. Where should you be putting money? Into TFSA, RRSP, other?
      Check out these links and let me know if you have more questions:

      2. Can you invest in these accounts at the same time? Sure! Why not?

      3. Life does change and your financial plan should change with it:

      Lots of good questions and the more you read the more you might find your answers.

      Thanks for visiting.

  2. Forgive my lack of investing knowledge here but I consider each person’s situation as different and
    I do believe there are some bright lights at the end of the tunnel for some non-investors including:
    1/ Selling your big home and moving to a less expensive home or condo in another less expensive location:
    The kids are self sufficient now (hopefully) and if you were lucky enough to have been able to purchase a home in a big metropolis i.e. Toronto…you will be rewarded handsomely for an initial below $200,000 investment (1990’s) to a $800,000 to 1 million dollar plus (2017)
    payoff. This is of course depending on what mortgage scenario you’re are in and presuming you haven’t used up all of your home equity.
    2/ Inheritance: some will be left considerable amounts from parents based on estate values progressing again through rising home values.
    3/ I think pensions depending on the years of service as a public servant, teacher, postal worker etc…. may contribute considerably to help hit that $1,000,000 required over the course of retirement for some people.

    1. Fair points.

      I will counter just for fun 🙂

      1) Yes, you can sell – but you have to live somewhere. Unless you plan to leave TO or Vancouver, you are simply trading one high-cost home or another type – unless it is a downsized home.

      2) Inheritance only applies to wealthy parents.

      3) This is where we agree. Folks with any sort of workplace pension should be able to hit $1M in pensionable/invested assets. A huge plus for those folks.

  3. I think this a very negative point of view you have. How does this give any inspiration to those who haven’t saved any money and they are now 50? I’ve been reading articles with a lot of positive words, to help those who have struggled in there life, and I find your article arrogant and closed minded. You probably have money saved and don’t understand, maybe you don’t have money saved and you do understand. All in all, don’t speak out in a negative way, giving people little to no hope. Definitely don’t become an inspirational writer, you would be horrible at it!

  4. Hello,
    Im currently saving for retirement in south America or Asia, ive been to over 64 countries and know i can live on 12 to 1400 monthly comfortably. My question next is at the age of 40 can i still amass 300 to 500,000 cdn in 15 to 20 years?
    either with index mutual funds , stock dividends etc. I can regularly contribute 500 to 800 monthly as i have no mortgage, kids.

    would you be able to list up a couple of ideas for me?

    1. 64 countries? Geez Wade. Amazing.

      Back to your investing question – if you save $1,000 per month for 20 years, getting 6% equity rate of return that = close to $500,000 assuming this is tax-deferred (RRSP) or tax-free investing (TFSA) or a combination of both given your contribution room for either acccount. You can play with numbers here:

      So, as long as you keep your investing costs low, for the next 20 years (i.e., own indexed funds (mutual funds or ETFs) and don’t trade your money away, that is very realistic.

      Let me know if you have more questions. All the best.

  5. I never cared for savings into the future because i had no past. Any savings I had from my years of working are gone. I am 50 and spent 3/4 of my life feeling suicidal. Who and how will I care for retirement? Being alive is my grace of savings.

  6. Wow. U guys need a reality chk..sometimes life deals u situations u can’t even imagine..thks for making me feel I don’t have hope….

    1. There are absolutely exceptions Wanda. This post was not about those. This post was about folks who have opportunities to save for retirement, and don’t, because they live beyond their means today.

  7. Life does get it the way sometimes..I’m 55 , widowed at 42, with 4 small kids…lost everything and had to start over..I was a stay at home mom, so had no career…starting over now with part time jobs…kids are older and all have jobs . I have a small savings I would like to invest so I at least have something whenever I retire…which looks like 75 haha…where should I put this money to get the best return…

  8. The biggest problem I found was wanting to take on excessive risk. When you are told you need at least $1 million to retire comfortably it puts people in panic mode when they are nowhere near that and only have a short time to catch up. These are the ones who wouldn’t accept any advice and ended up losing a bundle when the markets fell – and then cashed out! You can start saving what you can at 50, but you have to be realistic about what you’ll end up with. @My Own Advisor

    1. I hear ya, but I suspect many 50-somethings, will struggle with risk because some will be living longer and therefore will need to take on more risk for higher reward. I’m in my late-30s and I feel that way.

      Good point about starting to save at age 50, but I suspect most people won’t like the results if they’ve waited that long to save and invest.

      Thanks again for your comments and insight.

      I also want to take this chance to say congrats to you and Echo, for your blog popularity explosion over the last couple of years. Well done and well deserved!


  9. @My Own Advisor
    I don’t recall running into anyone who had saved absolutely nothing by age 50. Many of my clients, after going through a “retirement planning” tool which showed how much they would need to save, did come through with a larger savings amount and/or gave up their plans to retire at age 55. Actually seeing the numbers can be a great wake up call to change your habits.

    1. Hey Boomer,

      Thanks for checking in. No doubt you’ve seen my clients (when you were working) that got a serious wake-up call when they thought they could retire at 55. My wife and I would like to, retire at 55, and I’m thinking I need a unregistered portfolio of $1 M for that, let alone a pension. I expect with an aging population, our taxes and inflation have only one direction to go. I figure holding 40-50 dividend paying blue-chip stocks will be a great hedge for that.

  10. “The best time to plant an oak is twenty years ago. The second best time is now.”

    I think if you wait until 50 to start saving then you better have a very high income and your mortgage paid off or else you are going to have to adapt to what could be an unsatisfying lifestyle.

  11. Well, if you enjoyed your life to the fullest until age 50 and spent all your money on the things you love (ie. travel, family, hobbies, bucket list), then it might be worth it? After all, the older you are, the less you are able to travel and do things. So… maybe something else to ponder. Not that saving is not important. =)

    1. You know Peter, you have a point there. If you believe in a life-is-short philosophy then absolutely, live for the moment.

      For sure, the older you are, the less you are able to travel. Another good reason to live life while you’re young. Thanks for the comment Peter 🙂

  12. Also, remember to use your TFSA if you are starting late. Otherwise if you build up just enough for claw backs of the seniors benefits you’ll be no further ahead.

  13. Agreed that if you wait until your 50’s you’ve wasted the most important tool in your retirement planning tool box. Time is your biggest advantage when you are young and it makes it difficult to screw up if you use it correctly.

    However, with that said, if you did fritter away your mid life years not planning for retirement, the next best time to start is now. Yeah you’ll face a reduced lifestyle in retirement, you may have to postpone retirement, but you’ll still be better off then those who decide to save and invest absolutely nothing. Start planning.

    1. Absolutely, which was part of the point in my post…start young, even $25 here and there…it will REALLY add up come age 50 or 60.

      I wish I saved more regularly when I was younger. If I started to sock away even $25/paycheque in my early 20s, I’d be in great shape today. Alas, I’m getting there…but if I only knew the true value in compouding back then…

      Thanks for your comment!

  14. Once you are in your 50s, the serious debts are usually gone. The mortgage and most of the costs of raising children, which are substantial. I think many of you young-uns don’t realize really how much they cost…..we’ve had years where our medical expenses which were not covered by insurance cost $10,000. No wonder I always felt so broke. You don’t know what costs a child could result in, though they are always worth it!

    Continue with quick trips south and new cars every couple of years???? Wow, I don’t know any families who do that, but I guess they are out there. We tried to live on our income and have some fun with our kids, no debts except the house. One of our cars is 14 years old and the other, which feels new to me, is almost six years old. Actually someone asked me in a parking lot a couple of weeks ago if it was a brand new car??? Though my hubby really wants a new car to replace the old Subaru, I’ve been resisting.

    Anyhow, it is more about your lifestyle. So if you do want a new car every few years and think it will be the same once you are in your 70s, yes you had better save a lot. My nest egg which was/is in the stock market is still worth less now than in the year 2000, so the early saving from in my 30’s really hasn’t been so great. Luckily, I also had some stripped bond which were paying 9.75 percent for long while, now all matured.

    1. Barb,

      You raise some great points. Mortgages and costs of raising children are huge, so there is little expectation that folks save very much.

      I guess the point of my article is…every little bit counts and investing is really an exercise in behaviour. Start good investing habits early, grow with them, and you’ll be far better off. Too bad they didn’t teach this stuff in school. Man, they should…

      Hey, my car is 12 years old, so you have me beat there. I plan to own it another 3 years. 🙂

      Thanks for your comment!

  15. I agree that 50 is too late to start developing the habit of saving and thinking you’ll be ok in retirement. But 50 isn’t too late to start seriously building up your investments if you’ve already paid off your mortgage.

    You can save $360,000 by putting away $2k a month from age 50 to 65 (not including any interest, dividends or capital gains). Earning 4% a year would give you a portfolio of more than $500k.

    1. A paid off mortgage by age 50 is great. Having just home equity as your asset isn’t. I agree, putting away $2 K for 15 years is great, but I question whether folks who haven’t had much saving discipline over the years, will be able to change their ways.

      I recall your Mom worked as an advisor, did she run into this often with folks at that age?


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