Retirement Planning in Your 50s and Beyond
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Your 50s are an excellent time to get serious
about retirement planning, and that's because at this point in your life, you may have figured
a couple of things out. You might have a decent idea of where you
spend money, what your preferences are, the things you don't care for so much, and you
might also have some financial advantages at this point in life. Perhaps you've paid off a lot of debt maybe. If you had kids, they're out of the house
or almost independent. And you might be in your peak earnings years
because you have gained some expertise and some knowledge in whatever it is you do for
a living, and one big reason to get serious is you might have more money than you've ever
had before saved up so now it really counts.
A 10 % loss in the markets, for example, hurts
a lot more than it did when you were 22 years old. But whether you're just getting started saving
for retirement or you've been doing it for decades there are some important things that
come up in your 50s that can help you pave the way to a smoother retirement down the
road. The first thing to watch for is catch-up contributions,
and this is not the condiment, this is a catch-up contribution that allows you to put extra
into your retirement accounts each year once you reach age 50. The IRS sets maximum limits on how much you
can contribute to those accounts, but at 50, you can do a little bit extra and that helps
to boost what goes into those accounts each year for example in your 401k or 403 b or
governmental 457 you can put in an extra six thousand six hundred dollars per year as a
catch-up contribution on top of the max that you had back when you were 49 years old and
your knees didn't hurt as much. For traditional and Roth IRAs, for 2022 that
number is a thousand dollars of extra catch-up contributions.
Of course, this is assuming that you have
the cash flow to make the maximum contribution and put the catch-up contribution on top of
that, and if you don't, that's okay, it's not feasible for everybody, just do what you
can. But if you are really trying to maximize your
account balances at retirement, those catch ups are a powerful tool. The next thing to do is to look at your Social
Security and pension benefits. It's a good time to start getting a realistic
expectation of what you might get, and that's because you might assume that you're going
to get a lot more or a lot less, but it's really helpful to start figuring out how those
systems work and how much you can expect each month.
If you're eligible for Social Security, you'll
want to go through your earnings history and make sure that that is accurate because if
any years are missing you may end up with a smaller monthly retirement benefit. Your benefit is based on your 35 highest earnings
years, so you want to make sure that those good earning years are in there and that you
don't have any unnecessary zeros in your history. Keep in mind that you may be able to get some
retirement benefits from a former spouse or your current spouse, so if you're widowed
or divorced, for example, you want to research those potential benefits and you might also
be able to get income on your spouse's earnings record if you are still married and there,
are some strategies you'll want to look at as you go through that process. By the way, I'm Justin Pritchard, and i help
people plan for retirement and invest for the future. So, there will be some resources down in the
description below that cover this in more detail and give you some other pointers.
Another smart move is to manage your debts
or make a strategy for them. So, if you have consumer debts like credit
cards for example, you definitely want to plan to eliminate those debts and make sure
that your spending stays within your income limits so that you're not digging yourself
a hole during retirement or as you head towards retirement. But what about so-called "good debts" in retirement? For example, a mortgage. There's a lot of benefit to being debt-free
and not having a mortgage payment when you're in retirement a lot of people really focus
on getting rid of that loan before their retirement date but it's not necessarily the end of the
world to have a mortgage in retirement, and paying it off quickly out of your retirement
funds can cause some problems.
As long as you can fit that monthly payment
into your income maybe that's your Social Security, pensions, and some withdrawals from
savings accounts, and you can manage that debt comfortably, then again, it's not the
end of the world, and remember that that loan payment will eventually go away someday which
frees up cash flow for other expenses maybe health care expenses later in life. Speaking of expenses, how much are you going
to need to spend? Well, that's something to start figuring out
and there are a couple of different ways to do that this video that's going to pop up
above will give you some pointers on that but basically you can look at your spending
today and maybe adjust that for inflation or you might look at an income replacement
ratio and say maybe I just need 80 percent of what I'm earning now that might or might
not be right for you or you can target a certain level of spending such as $50 or $100,000
whatever the case may be, and with those numbers you can set a goal to start heading for once
you have an idea of your spending and your retirement income sources and your assets
then you can run some calculations and again we're setting your expectations so that you
know if you're on track or not and this can alert you to some potential shortfalls or
maybe let you know if you could retire earlier than maybe you expected there are a lot of
helpful online calculators out there they can do a decent job of getting you in the
ballpark but make sure you understand what their limitations might be so they don't necessarily
get super detailed and you might not be able to adjust all of the assumptions but again
you can get some basic ideas of if you're sort of close or if you're way off on what
you expected another good move in your 50s is to refine your investment strategy so up
to this point you may have been doing some great things to get you to the point where
you are you've built up some nice assets but if you've been using high risk strategies
maybe speculating maybe day trading that sort of thing it's time to ask yourself if that's
something that you want to continue doing at this stage in life it is difficult to consistently
get good results with those high risk approaches and you might have more to lose now than you
did previously.
I'm not saying you can't do it or definitely
don't do it but I would say proceed with extreme caution and maybe just say hey I've done a
good job up to this point maybe I'll reevaluate what I'm going to do going forward. At 50 it's time to start thinking about long-term
care if you haven't already been thinking about it there's a 70 percent chance that
you might need some type of long-term care and that might include everything from somebody
helping you out at home maybe this is a loved one assuming you have somebody at home who
is willing and able and remember it could be physically and emotionally difficult and
it might require expertise but it could include somebody helping you out at home who you know
or you going into a skilled nursing facility and paying those higher costs that are associated
with that higher level of care there are several ways to deal with the costs and that might
include a long-term care insurance policy but those are kind of problematic so definitely
look into them but consider some other alternatives as well maybe instead of maybe to supplement
or maybe you just go with insurance but some other options include saving up assets and
earmarking those for a long-term care event or maybe looking at your home equity as a
safety net to cover some of those big expenses that's not necessarily a fun way to spend
your time so one of the other things you can do is envision how you want your retirement
to unfold and this is a really important step that a lot of people skip it's important to
have something to do with yourself once you stop working you might have gotten a lot of
your social engagement a lot of your meaning and some of your identity out of your work
and you might want to not necessarily admit that but for a lot of people that's the case
it's easy to say that the main thing you're looking forward to in retirement is not going
to work but you probably want to have some ideas on how you're going to fill your time
and that way you're going to number one enjoy it more and number two there might be some
real benefits in terms of your mental and physical health if you are retiring to something
as opposed to just retiring from work, so ask yourself how will you fill your days? What are you most excited about and interested
in? What can you do to find some meaning and some
purpose during that time? And who might you spend time with, and what
are your plans for keeping your physical health as good as you can possibly keep it? So, I hope you found that helpful.
If you did, please leave a quick thumbs up,
thank you, and take care..
