Americans in their 50s keep hitting these 5 big roadblocks to retirement saving — here's how to break through and start building real riches

1. Shifts in retirement planning

One of the biggest challenges near-retirees face in the U.S. today is shortfalls in retirement savings accounts that result from getting caught in a transformational period.

Defined benefit pension plans were once the norm when it came to retirement savings. Workers did their jobs and employers offered a pension that provided a guaranteed lifetime income in retirement, with the amount paid dependent on things like salary and years of service.

In 1978, however, 401(k) deferred compensation plans were introduced, and a seismic shift occurred. Employers began moving toward defined contribution plans that required workers to decide how much and where to invest funds. This pension alternative became increasingly popular over time and is now standard practice in the private sector.

Americans in their 50s were among the first given the complex task of investing enough to support themselves in their later years. Many were unprepared to take on this obligation, potentially leading to shortfalls in retirement savings accounts.

To overcome this, workers must invest wisely. Those in their 50s should get as close as possible to maxing out their 401(k), including taking advantage of catch-up contributions available for those 50 and over. Build a budget around this goal and automate the process to maximize your chances of success.

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2. Lifestyle inflation

Lifestyle inflation is another issue. This can occur when you increase your spending and living standards as your income increases. For example, while you might have once been happy with an older used car or a smaller home, you're now eyeing that sprawling property or BMW after getting a big raise.

While there's nothing inherently wrong with upgrading your standard of living slowly over time, it can become a problem if you aren't living within your means or don't prioritize saving for the future over consumption.

Unfortunately, many Americans may not be capable of exercising this level of discipline. Bank of America data shows that the proportion of people living paycheck-to-paycheck increases with age.

One way to help curb this problem is to bank at least a portion of your raises or bonuses. If you're comfortable living your current lifestyle, any salary increases can go toward savings rather than spending more.

3. Student loan debt

While student loans are often considered a young person's issue, that's not necessarily the case. In fact, according to Pew Research Center, 14% of adults ages 40 to 49 still have student debt, as do 7% of people between 50 and 59, from their own education.

Some Americans in their 50s might also have student loans taken out on behalf of their kids. While this certainly may have a positive impact on a child's future prospects, burdening yourself with student debt at this age can also place your retirement security at risk.

Those who still carry student debt may want to check out different repayment plans and possibly assistance programs offered through employers. Parents thinking about taking on debt for their kids need to review their finances closely to ensure it's affordable, or explore alternative ways to secure funding.

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4. High housing costs

Home prices, along with mortgage rates, remain elevated. The median sale price of a house sold in the U.S. in the third quarter of 2024 was $420,400, according to the Federal Reserve Bank of St. Louis. As of Nov. 27, 30-year fixed-rate mortgages averaged 6.81%, per Freddie Mac.

Furthermore, those who purchased a home when mortgage rates plummeted during the pandemic may find themselves trapped by their low-rate loan and unable to afford to move because of present-day home prices and borrowing costs.

Those struggling with housing expenses may want to carefully consider their options. Downsizing could make sense if you can use your home equity to buy a smaller home with cash and avoid today's high rates. Looking into non-traditional homes, such as multi-generational living arrangements, could also be a viable solution for some families as many young people are also struggling to buy.

5. Supporting adult kids

Finally, supporting adult kids can be a significant roadblock to saving for retirement, and it's a common one. In fact, a Savings.com study found 47% of parents with grown kids provide them with some kind of financial support (not including adult children with disabilities). On average, these parents fork over twice as much to support their kids as the average working parent contributed to their own retirement account. This can be a serious drain on resources.

Overcoming this obstacle can mean tough conversations between parents and children. Parents can still help by offering non-financial assistance, such as tips on budgeting, or both sides can work together on developing a roadmap to financial independence.

Fortunately, all of these common roadblocks can be overcome. Start planning today to help yourself retire in time and with the money you need.