Your 50th birthday is a big milestone in your life, and once you’re past it, you should think about ramping up your retirement planning. Hopefully you’ve been hitting your goals every year. But no matter what your financial situation is like, you can make sure you’re on the right track with a few simple planning tips to use throughout your 50s.
1. Figure Out Your Goals
When it comes to your goals, there are two main ones that you should have in your monthly savings goal and your goal for your account when you retire.
If you’ve been contributing as much as possible to both your 401(k) and your IRA every month, then you could be in good shape and should continue doing that. If you haven’t, that should be your minimum monthly savings goal. Considering the tax benefits of those plans, you’re practically giving away money if you don’t contribute the maximum.
For your account goal when you retire, a common number talked about is 11-12 times the amount you make in your final full year of working. Of course, this will depend on your income, your lifestyle and the expenses you expect to have. Its best to err on the side of caution, though, considering how many people underestimate the amount they’ll need when they retire.
2. Plan to Get Rid of Your Debt
Debt isn’t good at any age, but you definitely don’t want to deal with it when you’re close to retiring or, even worse, after you’ve retired. In your 50s, you should be aggressively paying off almost all your debts. This isn’t the time to carry a balance on your credit card or take out a loan for a new car.
Many people in their 50s are still paying off their mortgages, and you don’t need to be as aggressive about that since this type of loan tends to have a low interest rate. You’ll likely get a better return on money that you invest than if you had used it to pay extra on your mortgage. Some experts suggest paying off your mortgage by the time you retire. If not, you should start paying extra to pay it off more quickly.
3. Determine Your Appetite for Risk
Diversification is important to reduce risk After all, having all of your eggs in one basket can be unsettling. As everybody learns and many learn too late, the earlier you start planning for when you retire, the better. But there are still steps you can take in your 50s to make sure that you’re set when you do decide to retire. The three steps above will put you on the right track.
We are here to help you plan for these crucial retirement planning years. Remember, we talk with per-retiree’s and retiree’s daily that likely share the same questions and concerns you have.