Retirement savings and strategy for the homestretch

A Britannica Money Learning Journey

Written byDoug Ashburn

Fact-checked byThe Editors of Encyclopaedia Britannica

Updated: Oct. 22, 2026

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If the early years of your retirement journey are about setting yourself on the right track, the middle years—typically your 40s and 50s—are about staying on track and quickly correcting if you happen to veer off course.

That’s easier said than done, of course, because life tends to get in the way. In these middle years, you’re likely juggling competing priorities:

Family. Sometimes you’re sandwiched between aging parents and growing children, each of whom may have financial needs that jump the priority queue.
Household. Homes require maintenance. Appliances and furniture wear out. Cars need repair or replacement. Fashions change. Kids get driver’s licenses. In other words, the expense meter is always running.
Career. You may have initiated a midlife career change, gotten caught up in corporate downsizing, or you’ve been successful but are burned out and considering early retirement.

How can you navigate this period with your dreams and plans still intact? Start by watching the video below, then continue your journey along the retirement homestretch.

Building a comfortable retirement typically involves combining Social Security with other sources of income.

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1. Keeping your eyes on the (retirement) prize

You’re checking in periodically with your retirement savings, right? So, how are you doing? (Compare your retirement savings progress to the averages by age group.)

These middle years can be financially challenging. Sometimes just breaking even feels like a win—especially if you’ve built a strong foundation and are looking ahead to those empty-nest years when you can ramp up your savings again.

But it’s best to check in with your retirement accounts, and if you’re tempted to dip into your retirement savings early—or you’re considering an early checkout from the rat race—make sure you know what you’re getting into.

The sandwich generation

The sandwich generation refers to middle-aged adults who take on the burden of caring for their aging parents while also supporting their own children.

Are you really ready for early retirement

Early retirement planning involves estimating your income, expenses, savings, and Social Security benefits to determine whether you can afford to retire early.

How to get around the 401(k) early withdrawal penalty

Technically you need to be at least 59 1/2 before you can take penalty-free withdrawals from your 401(k). But there are exceptions where you may be able to avoid the 10% penalty, such as if you qualify for a hardship withdrawal, have COVID-19-related expenses, or have recently adopted or given birth to a child. Even if you avoid the penalty, you’ll owe taxes, including a mandatory 20% withholding by the IRS.

The rule of 55

The rule of 55 is an IRS guideline about withdrawing money from a workplace retirement account, such as a 401(k) or 403(b), without paying a penalty. If you qualify, you can withdraw money from your current workplace retirement account if you leave your job, for any reason, the year you turn 55 or older. This rule does not apply to IRAs or previous workplace accounts.

2. Diversifying your retirement income streams

Social Security and workplace retirement programs such as a pension or 401(k) plan may make up a chunk of your retirement income. But if you’re able to add—and diversify—income streams now, you might enjoy a higher degree of comfort and peace of mind when it’s time to retire.

Consider adding income-producing investments, learn about annuities to see if one might be right for you, and if you like the idea of passive income, think about becoming a landlord.

3. Watch your risk

Recessions and bear markets are a natural part of the economic cycle, but they’re still unpleasant, especially if they happen at a critical point in your retirement journey. Understand sequence of returns risk—and how to mitigate that risk—so you don’t have to learn it the hard way.

Consider periodically rebalancing your portfolio and learn how a “bucketing” strategy can help protect your nest egg. And finally, once you’ve reached the homestretch of your journey, run through the pre-retirement checklist to ensure the pieces are in place.