How to Build an Investment Portfolio Even If You're Starting Late

A common rule of thumb says you should have saved at least six times your annual salary by age 50 to stay on track for retirement.1 But for many people, that benchmark feels out of reach. Life has a way of getting in the way. Raising kids, changing careers, starting over after a divorce, or dealing with financial setbacks can delay your ability to save.

If you’re feeling behind, you’re not alone and, more important, it’s not too late.

In fact, your 50s can be a powerful decade for building wealth. Many people hit their peak earning years during this decade, with fewer expenses as children become independent and mortgage balances shrink. With the right strategy, you can still build a solid investment portfolio that supports your goals for retirement and beyond.

Here’s how to get started.

Identify Your Goals

Start by defining what you want your portfolio to do for you. Are you aiming to retire at 65? Work part-time until 70? Travel more? Leave a legacy?

Clear goals help determine how much to invest, how aggressively to invest, and what types of accounts to use. This doesn’t have to be a rigid plan, but a target will guide your next steps.

Use a retirement calculator to estimate how much you’ll need and how much to save each month.

Prioritize Tax-Advantaged Retirement Accounts

Before investing in taxable brokerage accounts, be sure to maximize contributions to tax-advantaged accounts. Your options typically include:

401(k), 403(b), or 457(b) plans

If you have access to an employer-sponsored retirement plan, you can usually make pre-tax contributions to the plan, reducing your current tax liability. Investments in the plan grow on a tax-deferred basis, meaning you don’t pay taxes on the earnings until you withdraw the money.

Many employers offer to match a portion of your contributions, essentially providing free money toward retirement savings.

In 2025, you could contribute up to $31,000 if you were 50 or older, thanks to the additional $7,500 in catch-up contributions.2

It's also worth noting that you can split your contributions between a Roth 401(k) and a traditional 401(k) if you want some of your contributions to lower your taxable income this year and some of your contributions to provide a tax-free distribution stream in retirement.

Traditional or Roth IRA

With a traditional or Roth IRA, you could contribute up to $8,000 in 2025, including $1,000 in catch-up contributions if you’re older than age 50.3

Contributions to a traditional IRA may be tax-deductible. Contributions to a Roth IRA aren’t tax-deductible, but withdrawals are tax-free in retirement.

A few caveats about IRA contributions:

• Roth IRAs have income limits. For example, to contribute to a Roth IRA in 2024, you needed an AGI of $161,000 or less if single, or $240,000 or less if married. Because Roth 401(k)s don’t have income limits, you can still fund these to provide tax-free retirement income even if you can’t contribute to a Roth IRA.4
  
  
• If you don't have access to an employer-sponsored 401(k), you can contribute to a traditional IRA no matter how much you or your spouse make. However, you have to have earned income, such as wages, salaries, commissions, tips, bonuses, or income from self-employment.5
  
  
• If you have access to an employer-sponsored 401(k), you won't be able to deduct contributions to a traditional IRA from your income tax if you earn more than $146,000 (if married) or $89,000 (if single) in 2025.2 You can, however, contribute to a Roth IRA (provided you don't exceed the income limits above) — and you can max out your 401(k), including the catchup provision, no matter your income.

Health Savings Accounts (HSAs)

Health savings accounts offer triple tax advantages:

1. Contributions are tax-deductible. When you make pre-tax HSA contributions via payroll deductions, the money isn't subject to federal income tax, Social Security and Medicare tax (FICA), or most state income taxes.6
   
   
2. Your investment can grow tax-free because you don't pay taxes on any interest or investment returns in the account.
   
   
3. Withdrawals are tax-free as long as you use the money for qualified medical expenses.

If you don’t need the money for medical expenses, these accounts can become another bucket for retirement savings. After age 65, you can use them to cover non-medical expenses without penalty.7