What else comes to mind in your 50s? It’s normal to question whether your planning for retirement is on track, or if you need to prioritize making some changes as you head toward 65.
Planning for retirement isn’t just about the numbers; it’s also about visualizing the kind of life you want and making plans to support that vision. Maybe you can’t wait to travel to other countries, or maybe you’re excited to garden and read in your most comfortable chair. Both are great plans, and they require different strategies.
Accelerate your savings: When you hit 50, the IRS gives you a little more of a break on your savings plan. Instead of the typical $18,500 contribution limit for 401(k) plans, you’re allowed to contribute an extra $6,000 with the catch-up rule. This applies to traditional plans and to Roth 401(k)s.
While the rules for IRAs are a bit less generous, you can still put an extra $1,000 each year after you turn 50 into your traditional or Roth IRA.
Finding extra cash may not seem high on your “that’s fun to do” list, but it may not be all that challenging, either. It’s a good idea to try using a budgeting tool to see where your money is going. You may find that you could easily find extra savings in your budget with a few minor adjustments.
A few other key steps to consider:
Assessing your investment portfolio: A big change that comes in your 50s is that you need to examine your risk tolerance and make plans for when you expect to begin receiving distributions from investments. You may want to put some money in a fixed income investment so that you aren’t as vulnerable to the market swings that may affect your retirement date.
Getting rid of “bad” debt: Credit card debt interest is likely in the vicinity of 16%, often three times higher than a fixed mortgage or car loan. In addition, that debt doesn’t come with any benefits, such as mortgage interest deductions. There’s nothing wrong with enjoying the speedy convenience or the reward points a credit card can offer – but you might be surprised how quickly you could put extra money away for retirement if you’re not carrying a balance.
Planning for health concerns: The reality is that most people need increasingly more health care as they age. You also may want to consider long-term care insurance, particularly if you’d like to avoid asking family members to shoulder your care.
Investing in a Health Savings Account (HSA) is a good step because the money can be set aside, tax-free, for health-related costs. Any money not spent can be invested and grown until you use it.
Enjoying your 50s can mean a unique set of life changes, new decisions and new opportunities. You can really enjoy each of these changes with confidence if you feel like your retirement strategy is on track. Contact us at Lawson Kroeker to talk. We’ve been diligent, consistent and client-focused since our founding more than 30 years ago.