Financially, your fifties can be a very busy time. You may be paying for college for your kids, saving for retirement, and helping care for your aging parents, all at the same time. It’s a decade to take your finances seriously and do all you can to set yourself up for a secure retirement. Here are a few goals to consider making when you’re in your fifties.
This may be your last full working decade before retirement. Are you ready? Experts recommend having four to six times your annual salary saved by the time you turn fifty. During this decade, you’ll want to save even more, getting close to the total amount you want to live on. A financial advisor can help you look at the retirement you have planned and set a specific savings goal that will let you fund that retirement.
If you haven’t saved as much as you want to, you can make catch-up contributions to your retirement accounts after age 50. You can contribute $7,500 extra to your 401(k) and $1,000 extra to an IRA, over your usual contribution limits. Other types of accounts have other catch-up limits. So, if you weren’t able to save as much as you wanted when you were younger, here’s your chance.
In your fifties, your investment goal shifts from rapid gains to safe gains. Since you’ll need the money soon, a market downturn could be disastrous if you still have all your money in stocks. Instead, consider 60% stock, 40% bonds. That way you can make big gains on a portion of your money, but still have some protected in case things go south.
Your retirement is close enough now to daydream about. How do you want to spend your golden years? How will you afford that lifestyle? Look at the money that’s in your accounts. Will you be able to replace your whole income with that? If not, how could you downsize in retirement and still live comfortably? Moving further from urban centers or to a smaller house can make a big difference.
Now is the time to start thinking about your retirement age as well. One of the simplest things you can do to make your retirement more financially secure is to retire later. If you retire later, you have more time to save and less time you’re drawing on your savings. Plus, your Social Security payments will be higher if you retire after your full retirement age.
If your goal is to retire early, sit down with your advisor during your fifties and work out how it can happen. If you have a healthy nest egg, you might be able to do it. If not, what could you do in the next decade to catch up? Or you might consider a partial retirement, where you shift to part-time work but don’t take Social Security yet.
You may still feel young and healthy, but the older you get, the higher the odds of medical complications. While hopefully you’ll be hearty for decades to come, it’s definitely not too soon to plan for the future. One key way to be ready is long-term care insurance. If you don’t have it yet, now might be a good time to look into it. Your odds of qualifying for it are better now than they will be when you’re older. However, if your savings would be able to cover long-term care, you might not need insurance.
Your parents are a few decades ahead of you and may need long-term care already. If you haven’t yet, it’s time to have a conversation about them about their plans and your place in them. Do they expect to rely on you either practically or financially? If so, make sure you’re in a position to do that. It’s vital to have a plan for medical emergencies and a designated person to take care of their needs while they are ill.
Last, by your fifties, you should make it a top goal to have a will. Over the years you may have accumulated significant assets, such as your home and your savings. If you have a will, those will pass to your heirs much more easily when you go. Your retirement accounts should have a beneficiary designated already, but make sure that’s up to date. An estate lawyer can help you make sure everything is squared away in case anything happens to you.
Advice for Your Fifties
As retirement approaches and your financial life gets more complex, you’ll need competent advice more than ever. If you don’t already have one, your fifties are a good time to find the financial advisor who will see you through to retirement. This person should be experienced in personal financial planning and retirement, as well as knowing about any complexities in your life such as disability or owning a business. To meet the right advisor for you, contact us today.