Your fifties often mark a transformative decade, characterized by significant milestones like children leaving home and the satisfaction of paying off mortgages. Simultaneously, it can be a phase where your earning potential peaks, and the reality of retirement draws near. These combined factors make your fifties an opportune moment to make strategic financial adjustments, paving the way for the retirement you’ve envisioned. In this article, we will outline five essential steps to consider in your fifties, setting you on the path to realize your retirement aspirations.
Retirement Planning in Your 50s Tip 1: Give Your Savings Greater Attention
As you enter your fifties, it becomes beneficial to increase your savings. This is due to the opportunity presented by the IRS, allowing you to make “catch-up” contributions to your tax-advantaged accounts. if you’ve already been maxing out your 401(k) contributions, you can contribute an additional $6,500 once you turn 50. You can also begin contributing an extra $1,000 per year to your Roth IRA.
If you’re interested in going above and beyond catch-up contributions, you may find benefits in a deferred annuity, too.
Retirement Planning in Your 50s Tip 2: Dispatch Those ‘Bad’ Debts
In this decade of life, make it a priority to eliminate any lingering credit card debt. While mortgage debt and student loans may offer tax advantages, credit card debt provides no such benefits. This is especially true right now, as the average Annual Percentage Rate (APR) on today’s credit cards stands at nearly 25% – the highest it’s been in more than ten years.
Retirement Planning in Your 50s Tip 3: Create Your Social Security Strategy
Are you planning to work into your fifties and sixties? While Social Security benefits may seem distant, it’s important to consider how and when these benefits will be distributed in retirement. Delaying the start of your Social Security collection results in a higher lifetime benefit, emphasizing the importance of careful planning. You can read more about your benefit-claiming options, as well as check out your earnings record, through the Social Security Administration website.
Retirement Planning in Your 50s Tip 4: Prepare for the Unexpected
The most careful planning in the world can be upended by financial curveballs in retirement – unless you get intentional about plans to mitigate the impact of surprise expenses. Perhaps most critically, this includes planning for unforeseen medical expenses. Recent data suggests that a retired couple over 65 can expect to spend $315,000 on retirement healthcare costs. Concerningly, this does not include things like nursing home care or extended home care. So, it’s essential to consider how you’ll pay for your medical expenses without draining your retirement savings. As a pre-retiree in your 50s, there are two common strategies: long-term care insurance and Health Savings Accounts (HSAs). If you’re unsure which may be best for you, talk with a financial advisor for professional guidance.
Retirement Planning in Your 50s Tip 5: Ensure You Won’t Outlive Your Savings
Outliving your nest egg is a common concern in retirement. However, with careful planning, particularly in your fifties, you can establish a strategy to mitigate this fear and foster financial longevity. You’ll need to keep two things in mind: creating a more stable, lasting income and mitigating your tax liability. Your financial advisor can help you position your assets properly to help make your money go further in retirement but, generally speaking, you’ll want to consider spreading your assets across a variety of retirement vehicles that you’ll use for different purposes. For example, you’ll want to consider investments for continued growth, but also something like an annuity than could provide a more steady income stream regardless of market volatility.
Make Your Savings Count: Retirement Planning in Your 50s
While you may have a decade or more of work ahead, your fifties carry significant weight in shaping your retirement. The decisions you make during this period can profoundly impact the quality of your post-work life. Seize the opportunities presented in your fifties to ensure a fulfilling and stress-free next chapter after years of hard work and diligent savings.
Would you like a professional guide on your retirement planning journey? We can help! Our team’s mission is to help you gain confidence and live out the retirement you’ve always dreamed of. Contact the Cornerstone Wealth Management team today to learn more about retirement strategies and how we can serve you!
Registered Representatives offer securities through Independent Financial Group, LLC (IFG), Member FINRA/SIPC. Investment Advisor Representatives offer Advisory services through Independent Financial Group, LLC (IFG), a Registered Investment Adviser. Cornerstone Wealth Management, Cornerstone Tax Advisory and IFG are unaffiliated entities. Investors should be aware that investing based upon a strategy or strategies does not assure a profit or guarantee against loss. There is no assurance that any strategy will achieve its objectives. Insurance and annuities are products of the insurance industry. Guarantees are subject to the claims-paying ability of the insurance company and surrender charges may apply if money is withdrawn before the end of the contract. Please keep in mind Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable. If converting a Traditional IRA to a Roth IRA, you will owe ordinary income taxes on any previously deducted Traditional IRA contributions and on all earnings. We suggest that you discuss tax issues with a qualified tax advisor.
While you can use the funds in an HSA at any time to pay for qualified medical expenses, you may contribute to an HSA only if you have a High Deductible Health Plan (HDHP) — generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible. Some health insurance companies offer HSAs for their HDHPs. Check with your company. You can also open an HSA through some banks and other financial institutions. Source https://www.healthcare.gov/
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
