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Whether you’ve worked hard to save or come into $50,000 unexpectedly, deciding what to do with this money milestone may be weighing on your mind. It’s natural to feel both excitement and uncertainty: Should you pay off debt? Invest it, or save for a rainy day?
There’s no universally “right” answer, especially if you’re in or near retirement. Your best options will depend on your financial circumstances, budget and long-term goals.
So, what should you do if you have $50,000 saved? Many financial experts recommend starting with these top steps.
1. Pay down high-interest debt
Experts agree that tackling high-interest debt should often come first if you have $50,000. Why? Because the interest on credit card balances or personal loans — which can be as high as 36% in some cases — can quickly erode your financial stability, and cost you far more than you’d likely earn through investments.
It’s very difficult to get ahead financially when “bad debt” is weighing you down. This includes high-interest credit cards, personal loans and payday loans. In contrast, “good debt” usually consists of low-interest mortgages, student loans and auto loans. These don’t need to be paid off immediately if it fits into your broader financial plan.
Not sure how to decide? Look at the interest rates: If it’s higher than what you might earn in a typical investment portfolio — generally around 6% to 8% annually — paying it off first is the most financially savvy move.
Once high-interest debt is under control, you’ll have breathing room to build an emergency fund, save for retirement or explore investment opportunities.
Dig deeper: 5 debts to prioritize paying off before retirement
💡 A lesson from our writer: Using a large sum to pay off debt
A family member once came to me for advice, saying: “I have $25,000 in savings and $25,000 in credit card debt. Should I use all of that money to pay off my credit cards?” My immediate reaction was: Yes — keep a small chunk for emergencies, and use the rest to pay off the debt.
But I held off and asked a few key questions first:
1. How much income do you bring in each month? Is it enough to cover all your expenses, including minimum payments on your cards?
Turns out, the answer was no. Their income was $2,000 per month from retirement checks, but minimum payments alone were $1,200. Once we added in rent, utilities, food and other expenses, their total monthly budget was $3,650 — leaving them $1,650 short each month. Using all their savings to pay off debt wasn’t sustainable, since they were actively living off that money.
2. Can we cut any expenses to reduce the deficit? This family member was already skrimping by. There truly wasn’t much they could cut from their expenses to make up for the overbudgeting. A job was their best option.
3. How willing are you to get a job to cover your excess expenses? Turns out, us looking at their expenses was a wake-up call. This person felt very strapped for cash but was too afraid to look at their bank accounts to find out why. They were now motivated to find a job, even if it was temporary and part-time, to help pay down debt.
4. What can we do from here? Through some compromise, we created a debt-payoff plan that worked for this family member. We took about $15,000 of the savings to pay off a few credit cards (a mix of those with the highest APRs and lowest balances). This family member also got a job to cover their spending deficit. Once their job was stable, they were able to pay off their debt more aggressively knowing they had enough income coming in to cover their expenses.
This experience taught me a key lesson: There’s no universal answer to financial questions like “What should I do with $50K?” Paying off high-interest debt first is always a good call, but sometimes it requires a more complex strategy to get there.
Dig deeper: Debt snowball vs. debt avalanche: Which payoff strategy is best for getting control of your debt?
2. Set up an emergency fund
Once high-interest debt is under control, the next step is to create a financial safety net. Emergencies can happen at any moment. Maybe:
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You or your spouse needs to undergo medical treatments and can’t work for at least several months.
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A hurricane rips through your town, and now you’re facing home insurance deductibles and some out-of-pocket costs.
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Your car breaks down and needs expensive repairs.
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Your beloved dog eats something they shouldn’t and has to be rushed to the vet.
An emergency fund helps you pay for these unexpected expenses without digging yourself further into debt.
Ideally, you should have at least three to six months’ of essential living expenses in an FDIC-insured high-yield savings account. For example, if your basic monthly expenses are $5,000, set aside $15,000 to $30,000 of your $50,000 for emergencies.
If you’re close to retirement, you may want to lean toward the higher end (or even beyond) since you’ll be on a fixed income.
Dig deeper: How much should you keep in a high-yield account?
3. Max out your retirement accounts
After paying off high-interest debt and establishing an emergency fund, it’s time to think about the future — specifically, your retirement. Retirement accounts, like 401(k)s, traditional IRAs and Roth IRAs, are some of the most efficient tools for growing your wealth, thanks to their tax advantages.
If you have access to a 401(k) through your employer, contributing enough to get any available company match is a no-brainer. For example, if your employer matches up to 5% of your salary, contributing at least that amount would double your money.
Beyond getting the match, try to max out contributions to any retirement accounts available to you.
These are the maximum contribution limits for both employer-sponsored and individual retirement accounts in 2024 and 2025:
|
Retirement account |
Contribution year |
Maximum contribution — under age 50 |
Maximum contribution — ages 50 to 59 |
Maximum contribution — ages 60 to 63 |
|
401(k), 403(b), governmental 457 plans, Thrift Savings Plan |
2024 |
$23,000 |
$30,500 |
$34,250 |
|
401(k), 403(b), governmental 457 plans, Thrift Savings Plan |
2025 |
$23,500 |
$31,000 |
$34,750 |
|
Traditional and Roth IRA |
2024 |
$7,000 |
$8,000 |
$8,000 |
|
Traditional and Roth IRA |
2025 |
$7,000 |
$8,000 |
$8,000 |
Don’t forget about health savings accounts (HSAs), if you’re eligible. These triple-tax-advantaged accounts can serve as both a health fund and a supplemental retirement account.
Dig deeper: How to plan your retirement withdrawal strategy in 4 smart steps
4. Open an investment account
If you’ve paid off high-interest debt, established an emergency fund and maxed out your retirement contributions, the next step is to explore additional investment opportunities.
An investment account, like a taxable brokerage account, can help grow your money without the age restrictions and limitations that come with retirement accounts.
Here are a few ways you could invest $50,000, especially if you’re near or in retirement:
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Supplement your retirement income. Invest in options like dividend-paying index funds or mutual funds to create extra income to help cover living expenses.
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Plan for big purchases. Use an investment account to grow your money for future goals, like buying a smaller home, traveling or helping a grandchild pay for college.
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Cover healthcare costs. As healthcare expenses grow with age, investments can help you cover costs that go beyond insurance or an HSA.
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Leave a legacy. If leaving an inheritance or supporting a charity is part of your plan, investing can help grow your savings over time.
You can open an investment account with a reputable brokerage firm online, similar to how you’d open a bank account. Popular platforms include Vanguard, Charles Schwab and Fidelity, and many also allow you to automate your investing with a robo-advisor.
Talk to a trusted financial advisor if you’re unsure of the best ways to invest your $50,000.
Dig deeper: Golden years, golden gains: 7 best low-risk investments for retirees
5. Pay off other debt or fund other goals
If you’ve taken care of your high-interest debt, emergency fund retirement savings, and investments and still have some of your $50,000 left over, you could also use it to pay off lower-priority debts or fund other goals.
Pay off “good debt”
Not all debt is bad. Mortgages and student loans often come with lower interest rates and may even provide tax benefits. However, if you’re looking for peace of mind or want to free up cash flow, using a portion of your $50,000 to pay down these debts can be a smart move — especially as you approach retirement.
For example, say your current mortgage balance is $30,000 with three years left to go. Your interest rate is 4%. You could continue making monthly payments for three more years. Or you could pay it off and save around $2,000 in interest. Alternatively, you could choose to invest that money if you anticipate a higher return than your loan’s interest rate.
Fund other goals
You can also use part of your $50,000 to support personal goals that bring value to your life. For instance, maybe you want to update your home to improve your quality of life, especially if you plan to age in place. Or maybe you want to travel and pursue hobbies you’ve always wanted to try. You could set aside a portion of your money specifically for those goals.
💡 Expert insight: What to do with $50,000
We spoke to Kristy Kim, CEO and founder of TomoCredit — a financial wellness platform that helps immigrants and other underserved groups get access to essential credit without a credit score — about how to make the most of $50,000. Here’s her advice:
When we’re advising clients on allocating $50,000, we suggest first securing a solid emergency fund — typically three to six months’ worth of essential expenses. For most of our clients, this means setting aside $10,000 to $20,000 in a high-yield savings account to cover unexpected expenses or income loss.
With the remaining funds, a significant portion should be directed toward retirement accounts such as a 401(k) or IRA, maximizing any employer match or tax advantages; this could be around $20,000 to $30,000, depending on the client’s retirement timeline and current saving
Any remaining funds, usually $10,000 to $15,000, can then be allocated toward other investments — such as a diversified brokerage account or real estate investment trusts (REITs) — to promote longer-term wealth growth while balancing risk tolerance and financial goals.
What not to do with your $50,000 savings
While it’s exciting to have $50,000 at your disposal, it’s just as important to avoid mistakes that could derail your financial goals. Here are common pitfalls to steer clear of:
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Fall for a get-rich scheme. Be wary of investments that promise high returns with little to no risk. Scams like cryptocurrency “pump and dumps,” unregulated investments or too-good-to-be-true opportunities often lead to financial loss.
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Blow it on big-ticket items. It’s tempting to splurge on a new car, luxury vacation or exclusive golf club membership, but think carefully about how those choices impact your long-term security.
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Gamble it away. Avoid high-risk moves like betting your money on speculative stocks, gambling or unproven business ventures. While risk is a part of investing, calculated, informed risks are far safer than gambling.
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Avoid paying off debt. It may feel good to let your savings sit untouched, but ignoring high-interest debt can cost you more over time.
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Fail to give it time to grow. Many financial strategies take years to show results. Avoid the temptation to make frequent changes based on short-term market trends.
A trusted financial or retirement advisor can help you manage your new wealth as you plan for the future and provide peace of mind by assuring that you’re on the right financial path.
Dig deeper: How to find a trusted retirement advisor: Factors to consider for peace of mind in your golden years
Get matched with a trusted financial advisor in 4 simple steps
FAQ: How to invest and grow a large sum of money
If you’re still wondering what you should do with $50,000, you’re not alone. Here are answers to some of the most common questions people have about saving, investing and growing their money.
Is $50,000 in savings good?
Yes, having $50,000 saved is an excellent financial milestone. It puts you in a better position than many Americans. The key is to use that money wisely — prioritize financial security, like paying off high-interest debt and building an emergency fund, before exploring investments or other uses.
Is there a difference between a money market account and a money market fund?
Yes. A money market account is a low-risk interest-bearing deposit account that’s offered by banks, credit unions and financial technology companies. Money within a money market account is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration for up to $250,000 per person, per account.
A money market mutual fund is a type of mutual fund that’s offered by brokerage accounts and investment platforms. This type of fund invests in low-risk, short-term debt securities like treasury bills and cash equivalents with protections under the Securities Investor Protection Corporation, and not the government.
How much return can I get on a $50,000 investment?
Returns vary depending on the type of investment and its risk level. Safer options, like high-interest savings accounts, money market accounts or high-interest certificates of deposit with a 4% APY, could earn you $2,040 in one year — and that isn’t accounting for compounding interest. Bonds offer slightly higher returns but are still low risk. Stocks and other riskier investments historically average 6% to 8% annually, potentially growing $50,000 to $90,000 after 10 years at 6%.
What’s the difference between saving and investing?
The core difference between saving and investing lies in the accessibility of your money and the risks you take with it. Saving means keeping your money in secure accounts with little to no risk of losing your principal. On the other hand, investing involves buying assets like stocks, bonds or mutual funds that can potentially earn higher returns. Learn more in our guide to saving and investing to find the best approach for your golden years.
Sources
About our writer
Cassidy Horton is a finance writer who specializes in banking, insurance, lending and paying down debt. Her expertise has been featured in NerdWallet, Forbes Advisor, MarketWatch, CNN Underscored, USA Today, Money, The Balance and Consumer Affairs, among other top financial publications. Cassidy first became interested in personal finance after paying off $18,000 in debt in 10 months of graduation with an MBA. Today, she’s committed to empowering people to stand up and take charge of their financial futures.
Article edited by Kelly Suzan Waggoner