Turning 50 is a major milestone. Are you prepared for a retirement that could last 20 to 30 years or more?
Halfway to the century mark, you’re more than halfway to retirement. It’s time to take stock of where you are in relation to your retirement income goals. If you haven’t been serious about planning for retirement up until now, that needs to change.
You should review your current retirement savings and determine whether you’re saving enough. According to recent research, 32 percent of employees have almost no retirement savings. If not, the good news is you have time to make changes that can get you there.
If you don’t have as much saved as you should, there are ways to contribute more now to have enough later. Once you turn 50, the IRS allows you to increase the maximum annual contribution you can make to both your IRA and 401(k) accounts. This is called a “catch-up” contribution. The limits can change annually, so double-check how much you can add.
This is also the time to think about the issues you’ll face once you’re no longer working. There’s a big difference between saving and spending. It’s much more difficult to recover from financial mistakes as you get older. Do your homework to minimize your risks.
It can be tempting to chase higher returns, but those usually come with higher risk levels that you may not be able to tolerate at this stage, especially when markets are volatile. At this age, protecting your assets is often most important.
It also wouldn’t hurt to start reducing expenses. At the very least, it’s good practice for when you get older and have a smaller income. The money you save from not being as extravagant can go towards retirement income.
Try to reduce any outstanding debts. If you have a mortgage, consider paying it off early to get that expense out of the way before you retire.
This pre-retirement stage is an exciting time. But it can also be complicated. We haven’t even really scratched the surface in this article—there are Social Security benefits, Medicare, defined benefit pensions, 401(k)s, and much, much more to consider.
You may be at the peak of your career and enjoying working, or you may be wrapping up your career and transitioning into retirement. In either case, now is your chance to make sure you have everything in place for when you do retire and to make sure you are able to enjoy it.
